The SaaS Metrics that Matter Most with Éléonore Jarry-Ferron, Brightspark
Brightspark is a venture capital firm and fintech hybrid where accredited investors invest alongside Brightspark’s team. Headquartered in Montreal, Brightspark invests in pre-series A Canadian tech companies who normally have a product in the market, early traction, and some existing customers. Founded in 1999, Brightspark has invested in a number of Canadian SaaS companies including:
Classcraft – Software for schools and districts that motivates students to reach their full potential through playful, collaborative and sustainable learning experiences that promote growth and human connection.
Nudge – Nudge offers a communications platform that delivers tangible business results by helping non-desk workers stay informed, connected, and engaged at work.
Potloc – A consumer research company, extracting consumer insights by targeting respondents by interest or location on the social networks consumers trust.
Brightspark’s Éléonore Jarry-Ferron advises early stage SaaS founders to be obsessed about their customers and to focus on product-market fit.
She calls out 6 key metrics to consider at the pre-Series A stage from both an investor and a founder/CEO perspective. Each has its own nuances, and Eleonore advises SaaS founders to run cohort analysis, for example, by sales channel, annual contract value, or sales rep in an Enterprise context.
MRR (or ARR) Bookings – Here it’s important to track both new and expansion revenue. Brightspark likes to see early signs of customer accounts increasing overtime, or of a successful land-and-expand strategy.
MRR (or ARR) Growth Rate – Here a good target is at least doubling revenue year over year, or growth of 10 – 15% per month.
Logo Churn – Where lower is better but not always. In the early days, some customers will not be a good fit long term, so churn may be higher until the company finds product-market-fit.
LTV:CAC – At this stage, there may only be a year or so of data history. As such, Eleonore advises founders to be realistic in their LTV calculations. For an enterprise model with annual contracts, 2-3 years is a reasonable expectation. For an SMB model with month to month billing, a year is more reasonable.
Customer Revenue Concentration – It’s important to ensure that one customer is not making up a disproportionate amount of revenue. In general, this should remain under 30 – 40%.
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