8 SaaS Metrics That VCs Want to Know

There’s a lot to pay attention to when measuring the growth trajectory of your SaaS business. Are you increasing LTV while keeping CAC down? Is your customer acquisition rate greater than your customer churn rate? Do you distinguish between monthly recurring revenue and committed monthly recurring revenue?

Answering these questions is no easy task–SaaS metrics are extremely nuanced, and it can be hard to figure out exactly how to get the most complete and realistic understanding of your company’s growth, even if you have a few Harvard MBA’s on hand to model everything out.

When it comes to SaaS metrics, no group of people is more knowledgeable or influential than tech venture capitalists. They’ve seen it all, from every company, at every stage. They meet with thousands of entrepreneurs every year, and understand what works and what doesn’t. SaaS VCs have the best insights into what makes SaaS companies successful: from which growth indicators really matter, to the right benchmarks for the key metrics they care about.

So, what are the most important metrics for growing SaaS companies? InsightSquared went straight to the most prolific SaaS VCs in the world to understand what really matters in SaaS. We collected their best articles, podcasts, and formulas to create the first ever on-demand SaaS VC Influencer Reports & Executive Dashboard within InsightSquared.

Quick Ratio

Mamoon Hamid, Partner @ Social+Capital “If the company has a Quick Ratio of 4, they’re growing at a healthy rate, and have a low enough churn rate for me to invest.”

Account Churn

Scott Kupor, Managing Partner @ Andreessen Horowitz “Low churn equals happy customers; high churn means head for the exits.”

Retention Heatmap

Christoph Janz, Managing Partner @ Point Nine Capital “It’s almost impossible to get a really good understanding of a service’s usage without looking at activity and retention numbers on a cohort-by-cohort basis.” .

Early Stage LTV

Jeff Bussgang, General Partner @ Flybridge Capital “Time realism, appropriate cost of capital and accurate gross margins [will] discount your LTV as compared to simpler methods.”

MRR / ARR Over Time

Byron Deeter, Partner @ Bessemer Venture Partners “MRR is a great base metric, but CMRR is more insightful.” .

Revenue Churn

Tomasz Tunguz, Partner @ Redpoint Ventures “Each year, the median business loses about 10% of its revenue to churned customers.”

LTV

David Skok, General Partner @ Matrix Partners “A great way to understand any business model is to answer the following simple question: Can I make more profit from my customers than it costs me to acquire them?”

Renewal Rate

Jason Lemkin “Making customers happy isn’t just a good thing to do, it creates a huge share of your subsequent revenue down the road — 80% of it.” .