The SaaS Metrics that Matter Most with Michelle Scarborough, BDC
Michelle Scarborough is Managing Partner, Strategic Investments and Women in Technology Venture Fund at BDC. She leads the origination and execution of strategic initiatives to fill current and future financing gaps in the Canadian ecosystem. She is also responsible for BDC’s $200 M CAD investment to bring capital to high-growth tech companies with women in the lead. Investments range from Seed stage to Series A and B with revenues between $500 K and $30 M CAD.
At the Seed stage, Michelle and her team generally look for companies that have an existing Proof of Concept and are seeking product-market fit. At the series A stage, she expects companies to have secured some marquee customers and have found product-market fit.
Notable Canadian SaaS portfolio companies include:
Beanworks – Based in Vancouver, BC, Beanworks provides accounts payable automation software that uses AI-powered data capture to process invoices and vendor payments. In March, 2021, French enterprise services firm Quadient SA ADR purchased a 96% stake in Beanworks for $105 Million.
Nudge – Based in Toronto, ON, Nudge offers a communications platform that delivers tangible business results by helping non-desk workers stay informed, connected, and engaged at work.
ProcedureFlow – Based in St John, NB, ProcedureFlow provides cloud-based knowledge management software for creating effective visual procedures for company processes.
In terms of key metrics SaaS founders should focus on as they move towards Series A, Michelle has 7 top picks.
POC Conversion Rate – At this stage, logos should be late pilot with commercial conversion pending, or already converted to commercial. Conversion rate will vary by industry.
Revenue Growth Rate – At the seed stage, look for repeatability from existing customers. Develop a land and expand strategy while attracting new customers.
Gross Retention Rate – You want this to continuously improve over time. In a B2B context, 80 – 90% is a good target as you move through Series A to Series B.
Logo Churn – The trend is the key here. At the seed stage, logo churn may be 100% if you don’t have product-market fit this should drop as you hit product-market fit.
Gross Margin – This is often low at the seed stage. As you move to Series A you want to start driving to capital efficiency.
Net Burn – You want to track this carefully however it can vary dramatically.
Capital Efficiency Ratio – You want to be approaching 1 – 2 at Series A.
Finally, Michelle advises Canadian SaaS founders to keep a close eye on what US companies are doing. They constitute your biggest competition.
About SaaSCan
SaaSCan was created to bring deep experience in customer-centric growth and SaaS metrics to Canada’s growing SaaS ecosystem.
SaaSCan for Startups services were born in the early days of COVID-19 to help Canadian SaaS companies understand COVID’s impact on churn and retention. We have expanded to provide enablement for SaaS startups on SaaS metrics and benchmarks.
SaaSCan for Early Stage Growth services emerged from the need startups have to adopt a customer-centric approach as they grow, so they can deliver ongoing value to existing customers and optimize key SaaS retention, expansion, and efficiency metrics.
SaaSCan for Later Stage Growth services empower SaaS companies to be customer-centric and metrics-savvy at scale, further optimizing customer retention, SaaS metric performance, and company valuation.
To learn more about our Advisors, Partners, and Services, please visit www.saascan.ca.
