March 13, 2024

What do VCs expect in your monthly report (KPIs/metrics)?

Vincent Gouedard
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Drafting and writing monthly reports for your SaaS start-up can be challenging, especially when the expectations evolve as your company grows. Understanding venture capitalists’ (VCs) perspective is the first step towards improved communication with your investors. As a founder, you want your partners to understand your business’s financial health and operations efficiently. This is where the importance of clear concise monthly reporting lies.

Your monthly reports are the window through which VCs will gauge your start-up’s performance and potential. Mastering the art of compiling these can make or break investor confidence and funding opportunities. But what exactly do VCs want to know? It's not just about displaying data – it's about presenting the right metrics and Key Performance Indicators (KPIs) to reflect your business's current state and trajectory.

This article delves into the practicalities, offering actionable insights, use cases and concrete examples to elevate your reporting proficiency as a founder. From the importance of transparency and accountability to the evolving landscape of start-up metrics, we will navigate through the different expectations at various stages of your company’s growth. 

The crucial role of monthly reports for VC predictions

The success of your start-up depends, first and foremost, on a good relationship of trust with investors. That's why investing in effective and transparent communication with them is essential.

It's all down to your monthly reports. Presenting your results organised and transparently and highlighting critical data and metrics will ensure your investors have all the updates they need to evaluate your business’s performance and potential for growth and profitability.

As Alice Besomi, VP of Investments at Jungle Ventures, puts it: “We will look at [your data] from an operational perspective, trying to understand if you can profitably scale the business.”

Moreover, monthly reports foster trust between founders and investors, as they demonstrate your commitment to managing funds responsibly and ensuring good governance. To maximise the impact of your reports, focus on clarity, relevance, and transparency.

Indeed, Paul Roche, senior partner at McKinsey & Company, explains: “Top performers insist on transparent data and metrics that allow them to gain an integrated view of growth and margin drivers. This visibility helps them to execute against bold growth, efficiency, and productivity targets and to make decisions on new investments at a global integrated level.”

By adhering to these best practices, your SaaS start-up will strengthen its relationship with investors, multiplying its chances of success in a competitive landscape.

What metrics are traditionally expected at each stage of your business’s funding? 

At every stage of your company’s growth, VCs will focus on different metrics and examine specific results from your reports. Thus, as an entrepreneur, you are expected to adapt your accounts after each fundraising occurrence. Not only do you want to meet the goals VCs are looking for, but also highlight them clearly to update investors on your progress.

Looking at the details of your funding journey will help you elaborate better reports by collecting the correct data to promote your company.

Seed Funding

As a young business, you probably don’t have many results to show to impress investors. This is why, at this stage, you should primarily focus on demonstrating that your products or services have a place in a competitive market. Essentially, VCs must see potential in your company and be sure their risks are secured under a strong business plan.

This means the metrics you should emphasise reflect targeting audience interaction, such as user engagement, product usage, social proof and revenue growth.

  • User engagement and product usage measure how valuable users find your product based on how much and how long they interact with it.
  • Social proof reflects the positive feedback from your customers. 
  • Revenue growth shows investors how quickly you were able to expand your sales, and it can be measured with metrics such as monthly recurring revenue (MRR) and annual recurring revenue (ARR). 
  • Additionally, customer acquisition cost (CAC), customer lifetime value (LTV), burn rate, and churn rate are crucial for demonstrating business viability and efficiency.

Although these metrics can be interesting at this early stage, they could be more decisive. VCs will see your start-up as a market opportunity to develop, more than an ongoing successful business to support. 

Series A Funding

As you hit the Series A funding stage, VCs recognise your business has the potential to grow, but it is time for you to meet their expectations. Here, investors are looking for concrete proof of viability and scalability.

Alice Besomi explains that “product-market fit is the first thing VC investors will be looking at to understand how valuable the product, service or platform is for the customers.” 

She then questions:

  • How many new customers are you adding on a month-to-month basis?
  • How much new revenue are you bringing?
  • How well-defined are the go-to-market and sales motions?

Therefore, you must use metrics like revenue growth, unit economics, market penetration, and operational scalability to give VCs answers.

Here, revenue growth will again prove you can attract customers who will buy your offer. An increasing MRR and solid quarter-over-quarter growth can show this. 

  • Unit economics refers to your business's direct revenues and costs on a per-unit basis. 
  • Market penetration measures the proportion of a product or service sold compared to the estimated total market. 
  • Operational scalability indicates your business's capacity to adjust and develop its operations smoothly as it expands.

Additionally, a low churn rate and CAC, as well as a high LTV will prove to investors your business has a solid product-market fit.

These metrics are essential at this stage to show evidence of your business’s value, traction and potential for growth and development. 

Series B Funding

As a Series B funding company, your business is well-established, and your valuations must reflect that.

For instance, at this stage, you should pay attention to the Rule of 40, which dictates that the combined growth rate and free cash flow rate should equal 40% or higher. 

As McKinsey partner Paul Roche emphasises, VCs often use this as a critical indicator of your start-up’s success.

While achieving it might be challenging, focusing on essential metrics such as revenue growth, profit margin, market share, brand recognition, burn rate, and CAC can help your company align its strategies with the Rule of 40 frameworks. Additionally, you should carefully monitor and optimise ARR growth, net retention rate, payback period, and free cash flow percentage, as these factors can influence the Rule of 40 success. These metrics will show investors clear plans and momentum and a good balance between growth and profitability, suggesting your Series B start-up is ready to dominate its market.

Summary - Essential Metrics for your journey

Top VCs Aman Verjee and Dave McClure - who invested in companies like Canva, Lyft, Reddit, and more - give this overall summary of the most important metrics you should consider at every stage of your business’s funding journey (excluding seed stage):

Table 1

SaaS Metrics


Very Good


Growth in ARR

3X YoY

2X YoY <2X YoY

Gross Margins


50 - 70%


Net Revenue Retention


110 - 140% <110%


2:1 1:1 <1:1

Profitability (EBITDA)

Yes Breakeven N.A.

Burn Multiple

<1X 1.1 - 1.5X >1.5X

*Burn Multiple = Net Burn / Net New ARR

SaaS companies are evolving, but metrics aren’t

Although most of these traditional SaaS metrics are still relevant today, you should think ahead to grow your business in an evolving start-up environment. 

Indeed, as Kyle Poyar explains,  modern software businesses operating under models such as Product-Led Growth (PLG), vertical SaaS, or usage-based software can be restricted by traditional metrics and KPIs, as they will not fully capture the nuances of these models where product usage, customer activation, and expansion play significant roles in driving growth and revenue. 

Here are some examples:

  • Consider the impact of the product as a primary growth driver. In PLG models, products are central to acquisition, conversion, and growth, unlike the traditional reliance on sales and marketing. For instance, Atlassian invests 50% of its revenue in research and development (R&D) compared to 20% in sales and marketing, challenging us to rethink the role of R&D in revenue generation.
  • The "land-and-expand" strategy is another area where traditional metrics fall short. Usage-based models, such as Snowflake, often start with more minor initial contracts that significantly grow over time, with Snowflake achieving a Net Dollar Retention (NDR) rate of up to 177%. This raises the question of the appropriate level of customer acquisition spending when the LTV can be very high.
  • New revenue streams with different margin profiles, such as payments and FinTech services, are reshaping the SaaS landscape. For example, Shopify generates 76% of its revenue from merchant solutions, diverging from the traditional software subscription model. This shift prompts a reassessment of how we value different revenue sources.

A new metrics playbook?

Because the old indicators aren’t evolving fast enough, there is a need for new metrics to adapt to the unique characteristics of modern SaaS companies. 

More relevant KPIs would track user journeys, treating product usage as a signal of buying intent and emphasising activation rates, product-influenced revenue, cohort-based retention, and natural growth rate.

Here are six KPIs Kyle is promoting for your modern SaaS start-up:

  • Annual Revenue Run-Rate expands upon ARR to include non-subscription recurring revenue streams such as usage, payments, FinTech, and marketplace fees.
  • Change in Net-New ARR will reveal whether your business is experiencing linear or exponential growth, with VCs preferably looking for exponential growth.
  • Net-New ARR versus Cash Burned (Burn Multiple). Unlike CAC payback, this metric considers all investment areas driving customer acquisition, conversion, retention, and expansion. A higher incremental ARR generated per dollar equals better efficiency.
  • ARR per Full-Time Equivalent (FTE) will provide valuable insights into the operational efficiency of your business.
  • Product-Influenced Revenue (PLG) gives more importance to R&D and sales & marketing. Monitoring it will help you assess the effectiveness of your strategies in driving growth.
  • Cohort-Based Retention by Customer Type helps you evaluate retention rates across customer segments.

The following table gives a summary of the key figures for these metrics: 

Table 1

New SaaS Metrics


Very Good


Annual Revenue Run-Rate


$5M - $10M <$5M

Change in Net-New ARR

>3X YoY

2X YoY

<2X YoY

Net-New ARR VS. Cash burned

High burn multiple

Moderate burn multiple Low burn multiple


>$200,000/FTE $100,000 - $200,000/FTE <$100,000/FTE


50% PLG 25% - 50% PLG <25% PLG

Cohort-based retention by customer type

>80% Retention 60% - 80% Retention <60% Retention

While traditional SaaS metrics focus heavily on sales and marketing-driven growth and subscription-based revenue models, we need a new approach centred around the user's journey and product usage as indicators of buying intent. These adaptive metrics will help you accurately evaluate your business and emphasise its success to VC investors in today’s SaaS start-up market.


Knowing how to compile your data into clear and concise monthly reports effectively is the best practice for improving your SaaS start-up’s success and communication with VC investors.

At each stage of your company’s growth, you should pay attention to investors’s expectations to meet their requirements best, from demonstrating market potential in seed funding to proving viability and scalability in Series A and B.

As the SaaS landscape evolves, you should embrace adaptive metrics focusing on different aspects of your company, such as user journey and product usage. By following these tips, you will have all the tools you need to turn your start-up into an attractive business, securing good funding and VCs’s confidence.