CAGR

The one growth rate that explains a multi-year run.

Market reports and pitch decks are full of "growing at a 34% CAGR". CAGR (compound annual growth rate) is the steady yearly rate that gets you from start to end, and you can estimate it in your head.

The move

Find the total multiple (end ÷ start). Ask: what yearly multiplier, multiplied by itself once per year, gives that? 2 years → square root. For anything else, count doublings and use the rule of 72.

Worked example

$1M → $4M in 2 years

  1. Multiple: 4×
  2. What × itself = 4? 2 × 2
  3. 2× per year = 100% CAGR
  • It’s not (total % ÷ years). $1M → $4M is +300%, but only 100% per year compounded.
  • 1.2² = 1.44 and 1.1² = 1.21 are worth memorising.