The SaaS Metrics that Matter Most with Michelle McBane, StandUp Ventures
StandUp Ventures champions breakthrough companies led by women. They believe that women-led companies think outside the box, recruit great talent, and serve bigger markets. They invest in seed-stage technology companies with at least one woman in a C-level leadership position within the company and an equitable amount of ownership.
Notable seed-stage Canadian SaaS portfolio companies include:
Arteria – Applies artificial intelligence and a data-first approach to the drafting, negotiation and analysis of contracts. Arteria turns executed contracts into data, helping organizations complete contracts, and get to revenue, faster.
Bridgit – Bridgit is a jobsite communication platform for the construction industry. Using the platform, contractors and engineers can track the performance of all participants in a building’s construction. As well, users can track the status of deficiencies and assign responsibility for their remedy.
Coconut Software – An enterprise appointment scheduling company that provides virtual meetings, in-branch engagement and analytics solutions for Community Banks and Credit Unions.
StandUp Ventures Managing Partner, Michelle McBane, explains that at the seed stage she and her team work with founders to start thinking about their SaaS KPIs. Companies don’t often have the data history to reliably track SaaS metrics until they’re past about half a million in Annual Recurring Revenue (ARR). However it’s key at this stage to establish what the series A milestones should be and progress towards them.
Four metrics Michelle calls out as key at the seed stage are:
MRR/ARR – In an enterprise context at the seed stage, companies are often working hard to convert proof of concepts (POC) to SaaS contracts. Don’t call the revenue ARR if it’s really POC revenue. Do lay the foundation for a seamless transition from POC success to a SaaS revenue stream right in the contract.
MRR/ARR Growth Rate – At the early stages, StandUp is looking for evidence of strong growth rates and evidence of early traction, but doesn’t typically seek out a specific growth rate target.
Activation Rate – Pick a product usage metric or customer behaviour that could be an early indicator that an account will renew and expand down the road. This should be reviewable in weeks or months, not years. Track these indicators and do cohort analysis to determine common patterns. Mark Roberge (former Hubspot CRO) has done some great analysis on this topic.
Net Dollar Retention – Michelle and her team get excited when they see companies who are able to talk about retention at an early stage because retention is ultimately one of the most important SaaS metrics.
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