Investor & Founder Checklist

Unit Economics Due Diligence Checklist

A healthy-looking LTV:CAC ratio can still be built from mismatched cohorts, incomplete acquisition costs, and optimistic retention assumptions. Use this checklist before investing, fundraising, or approving the next growth budget.

June 15, 20267 min read

Key takeaways

7 min read

Based on Chapters 3, 9, and 15 of The Two Numbers

Reconcile CAC to actual company costs, not the advertising dashboard.
Match LTV and CAC to the same cohort, channel, and period.
Review payback and cash requirements alongside the lifetime ratio.
Stress-test the model before approving acquisition growth.

Download the working checklist

Use the CSV in a spreadsheet, assign owners, collect evidence, and mark each item before an investment committee, board meeting, or fundraising process.

Download CSV checklist

1. Validate LTV

Is LTV calculated from gross profit or contribution profit rather than revenue?

How much of the customer lifetime is observed and how much is extrapolated?

Does LTV differ materially by cohort, channel, plan, geography, or customer type?

2. Reconcile CAC

Does CAC include sales compensation, tools, agencies, creative, incentives, and onboarding?

Can the company reconcile acquisition costs to the general ledger?

Are paid, organic, partner, and sales-led acquisition paths reported separately?

3. Match the ratio correctly

Do LTV and CAC refer to the same customer population and time period?

Is the ratio improving or deteriorating across recent acquisition cohorts?

Does one strong segment hide an unprofitable channel or customer group?

4. Test cash and payback

How many months of gross profit are needed to recover CAC?

Does the average customer remain active beyond the payback month?

How much working capital is required to fund the planned growth rate?

5. Stress-test the plan

What happens if CAC rises 20%, gross margin falls five points, or churn worsens one point?

Which operating initiatives are expected to move LTV, CAC, and payback in the next 90 days?

Who owns the calculation and how often is it reviewed?

Evidence matters more than the headline ratio

The goal of due diligence is not to prove that the ratio is good. It is to understand what makes the ratio true, what could make it fail, and how much capital the acquisition engine requires. Ask for cohort tables, general-ledger reconciliation, retention curves, channel-level costs, and scenario models. The same discipline applies to the paperwork side of a deal — I keep a term sheet reading checklist for exactly that reason.

Early-stage companies will use assumptions. That is acceptable when observed data and assumptions are clearly separated. A conservative range is more useful than a precise lifetime estimate built from six months of history. If you are the one preparing for this scrutiny, you can test how fundraise-ready you are before investors run this checklist on you.

Build the slide that summarizes the diligence

Calculate LTV, CAC, ratio, and payback, then export the result to PowerPoint.

The checklist identifies the questions. The book provides the calculation methods, diagnostic frameworks, and 90-day operating system.