But here’s the catch: the most effective founders aren’t just reporting on today’s metrics, they’re already thinking about what the next investor will want to see.
As each funding round approaches, expectations shift. So what satisfies seed investors just won’t cut it at Series A.
For example: seed stage investors look for early traction: a few paying customers, signs of user engagement, and having your burn rate under control;
Whereas series A investors demand a deeper financial narrative: churn and retention data, gross margin insights, and a credible path to sustainable growth.
Thinking ahead isn’t just prudent: it’s strategic. We call this approach ‘measuring ahead’. It’s about proactively preparing for future investor expectations by building better habits today. So let’s take a closer look at what this means, and how you can do it.
Speak the language of next stage metrics
Start embedding key metrics into your team’s everyday thinking, even if they’re not perfect yet – as waiting until due diligence to figure these out is too late.
Start thinking about these now:
- Net dollar retention
- CAC payback period
- Customer lifetime value
- Revenue by customer segment
Strengthen your data hygiene
Reliable metrics require reliable data, today’s clean inputs lead to tomorrow’s credible dashboards. Ask yourself:
- Can you clearly distinguish enterprise vs SME customers?
- Are your contracts correctly tagged in your CRM?
- Is your revenue attribution consistent?
Build team fluency
Investors won’t just ask for your numbers, they’ll ask if you understand them. These aren’t just technicalities but tests of leadership and operational control so make sure you know your stuff. Be ready to explain things like:
- Why CAC spiked last quarter
- How your gross margin is calculated
- What’s driving your retention trends
Again, you don’t need to be perfect in your understanding, your data or the way you communicate, just understand the principles initially…relevant to the next stage investor…so you can talk to them, even as a work in progress. Of course, the further you go, the more you will actually need to nail the data, the measurements and the presentation of these.
Craft the next chapter
‘Measuring ahead’ also means anticipating the narrative that will resonate at your next raise. The earlier you identify those markers, the more time you have to achieve them and shape the story you’ll tell.
Consider these questions:
- What benchmarks will demonstrate smart growth?
- What metrics validate your product-market fit or expansion thesis?
- What evidence will show you’re ready to scale?
Later stage metrics:
Let’s delve into those later stage metrics we need to know, now:
Rule of 40
Sounds important, and to be honest it’s pretty handy. The rule of 40 gives us a quick overview of performance by combining two key financial metrics: growth and profitability. This is a really simple way of demonstrating the inherent trade off which we’ve touched on a few times between the initial focus on growth (perhaps at all costs) and the journey towards an optimised growth path. In the early days, you’re looking to have (largely inefficient) growth…think back to those triple, triple growth stages but (funny that) sooner or later all businesses need to turn up the profit dial, typically along with a slowing growth (think double, double). What is not good luck (but even this happens early on) is low growth, low profit.
How to calculate: growth % + EBITDA %
Benchmark: 40%+
Magic number
Magic? We like the sound of that. How efficiently are you turning sales and marketing spend into recurring revenue? Use this to assess whether you are using resources effectively.
How to calculate: net new ARR / sales and marketing expenses
Benchmark: 0.75 – 1.0+
Utilisation
Are you using resources effectively? This metric measures this, especially focusing on billable time or capacity.
How to calculate: billable vs total % (for service)
Benchmark: 75-85%
R&D/S&M/G&A as % of revenue
Track your research and development, sales and marketing and general and administrative ratios in relation to revenue, very important when raising capital so don’t neglect this.
How to calculate: allocated cost by area
Benchmark: R&D: 30-10%, S&M: 30-40%, G&A: 15-20%
EBITDA
It’s all in the name…earnings before interest, tax, depreciation and amortisation. Catchy!
How to calculate: profit: earnings before interest, tax and depreciation
Benchmark: 0-20%
What’s next?
Don’t just react: prepare. The best startup teams aren’t scrambling to answer investors’ current questions, they’re ready for the questions that haven’t been asked yet. In venture funding, remember the smartest way to stay ahead is to measure ahead.
Don’t hesitate to get in touch with any queries around measuring ahead, or in fact any stage of the metrics journey – we’d love to help.
