Monthly growth rate / CMGR
Pulse of PMF; compounding separates breakouts.
- Formula
- (End/Begin)^(1/n)-1; MoM = (M - M₋₁)/M₋₁
- Unit
- %/mo
- Models
- All models
| All | 5–7%/wk good, 10%/wk great, 1%/wk weak (Paul Graham) | Paul Graham 'Startup=Growth'; Bessemer State of the Cloud |
| All | ~200%/yr at $1–10M ARR, decaying to ~60%/yr by $50–100M (Bessemer) | Paul Graham 'Startup=Growth'; Bessemer State of the Cloud |
What it is
Monthly growth rate — often expressed as CMGR (compound monthly growth rate) — measures how fast a business is compounding revenue or users on a per-month basis. The CMGR formula is (End/Begin)^(1/n) − 1, where n is the number of months; simple MoM growth is (M − M₋₁)/M₋₁.
How to calculate it
For a point-in-time MoM figure divide this month's revenue (or users) by last month's and subtract one. For a smoother multi-period rate take the ending value divided by the starting value, raise it to the power of one over the number of months, and subtract one. This smooths out lumpy individual months.
Why it matters
Growth rate is the single most predictive signal of startup trajectory. It compounds relentlessly: 5% per month becomes roughly 80% annually; 10% per month exceeds 200% annually. Investors and boards use CMGR as the primary lens for comparing companies at different ARR stages.
Benchmarks & pitfalls
Paul Graham's widely-cited heuristic (from "Startup = Growth") treats 1%/wk as weak, 5–7%/wk as good, and 10%/wk as great — this is a directional rule of thumb, not a rigorous study. Bessemer's State of the Cloud data (2023–25) shows a stage decay curve: roughly 200%/yr at $1–10M ARR falling to roughly 60%/yr at $50–100M ARR. Always clarify whether you are measuring revenue, ARR, or user growth — they can diverge significantly — and whether the period is weekly or monthly before comparing to any benchmark.