WHY DO INVESTORS CARE ABOUT LTV TO CAC SO MUCH?

Summary from the TLDR Marketing newsletter

Investors focus on the LTV to CAC ratio because it reflects sales and marketing efficiency, which directly impacts company valuation. A higher ratio means more profit per customer acquisition dollar, enabling growth investment and leading to higher valuation multiples. For example, a 3X LTV to CAC can triple valuation compared to 2X. Adjusted by gross margin, it fairly compares sectors. Though complex for daily use, breaking it down internally helps improve value.