Dear SaaStr: What Are The Top 10 Metrics Series A Investors Look At?
Here’s the prioritized list of metrics a seed-stage SaaS startup should focus on to position itself for a successful Series A:
1. ARR Growth Rate. Of Course 🙂
Growth is the #1 metric for Series A. Investors want to see you’re on a trajectory to scale. Ideally, you’re growing 7–15% month-over-month. If you’re not at $1M ARR yet, you need to show a clear path to hitting it within 12–18 months.
2. Net Dollar Retention (NDR)
NDR is a critical signal of product-market fit and customer love. While 120%+ NDR is the gold standard, at seed stage, aim for at least 100% (i.e., no net churn). If you can show early upsell motion or expansion potential, even better.
3. Gross Retention Rate (GRR)
GRR is the foundation of your business—it shows how well you’re retaining customers before upsells. A GRR of 90%+ is ideal. Anything below 80% signals churn issues that need fixing before scaling.
4. CAC Payback Period
Your customer acquisition cost (CAC) payback period should be 12 months or less. This shows you can acquire customers efficiently and scale without burning too much cash. If it’s longer, you’ll need to demonstrate how you’ll improve it.
5. Burn Multiple
This is your burn rate divided by net new ARR. A burn multiple of 1–2x is healthy. If you’re burning $3M to add $1M in ARR, that’s a red flag. Investors want to see you’re capital-efficient, especially in today’s market.
6. Lead Velocity Rate (LVR)
LVR measures the growth in qualified leads entering your pipeline. It’s a leading indicator of future ARR growth. If your LVR is growing faster than your ARR, it signals your sales engine is gaining momentum.
7. Sales Efficiency
Metrics like Magic Number (ARR growth divided by sales and marketing spend) or LTV/CAC ratio help demonstrate the efficiency of your go-to-market motion. A Magic Number of 1+ or an LTV/CAC ratio of 3:1 is a good benchmark.
8. Customer Satisfaction Metrics (NPS/CSAT)
Investors want to see that your customers are happy. A strong Net Promoter Score (NPS) or Customer Satisfaction (CSAT) score can help validate your product’s stickiness and value.
9. Pipeline Coverage
Show that you have enough pipeline to hit your next revenue milestones. A 3x pipeline coverage ratio (pipeline value = 3x your ARR target) is a good rule of thumb.
10. Product Stickiness
Demonstrate that users can’t live without your product. Metrics like DAU/MAU ratios, feature adoption rates, or cohort retention curves can help prove this.
You don’t need to be perfect on all these metrics, but you need to be strong in most of them.
If you’re weak in one area (e.g., CAC payback), you’ll need to overperform in another (e.g., NDR or growth rate). The goal is to show that you’ve built a solid foundation and are ready to scale.
