Investors at this stage are looking for signs that the business model is not only proven, but repeatable at scale. Your product is established, customer acquisition channels are functioning, the sales team are setting and hitting their targets reliably, and the focus now turns to operational excellence, market expansion, and long-term financial health. Investors expect a clear view into how your business grows, what drives efficiency, and whether you can maintain momentum without burning cash irresponsibly. Strong Series B metrics reflect a company that’s moved from experimentation to execution, ready to expand confidently and with control. So let’s delve into what you need to focus on now, and as always – don’t hesitate to get in touch for advice and a chat.
And a reminder of each stage of the journey in a handy pic, here 👇:
Gross margin
This is the percentage of revenue that remains after deducting the cost of goods sold (COGS or COS), or direct costs associated with delivering the product or service. Simply put – is your startup effective in producing and delivering its product/service? Let’s hope so!
How to calculate:
- (revenue – COS) / revenue
Benchmark:
- 75-85%
Extra tips:
- Investors are typically looking for a “fully-loaded” COGS which for most SaaS companies is then showing around an 80% margin. What we’re really trying to show is that we’ve actually captured all of the costs that go to support the revenue coming from the SaaS platform, there’s often accounting work that needs to be done (both initially and each end of month by your Finops team) at this stage to correctly allocate ‘devops’, hosting fees, CS support costs etc into the COS category
- Where your product includes an element of implementation, training or even an ongoing service element you’re also going to want to capture each of the revenue (if, say, implementation, is billable) and the associated expense of delivering that service. You’ll want to separate out the revenue/COS/margin from the pure SaaS component, so you’re not diluting that precious 80%
- Oh, and a final (complicated) refinement to start thinking about: over time, companies start to capture, measure and report information based on different market segments, e.g. enterprise customers vs self service. As the full-service cost of supporting an enterprise customer is higher than a self-service customer you’ll likely start to want to pay attention to margins (and average contract value) by segment
Burn multiple
Sounds painful, hopefully not. This metric shows how much net cash burn you’re spending to generate each dollar of net new ARR.
How to calculate:
- Net burn / net new ARR
Benchmark:
- <2-<1
ARR/employee
How much ARR is generated by each employee in the company? Let’s see if you’ve got the right people in the right places.
How to calculate:
- ARR / headcount
Benchmark:
- $100-300k+ increasing over time
Pipeline metrics
This metric looks at the key measurements tracking the health, size, and efficiency of your sales pipeline – which is the series of stages people go through before you get them on board as a customer. This will also help with understanding future revenue potential, and provide accurate forecasts to investors.
How to calculate:
- Pipeline coverage, conversion metrics
Benchmark:
- 2-3 x sales target, 20-30%
Extra tips:
- There is a whole world (and maybe a separate future article) of sales pipeline metrics you can and should be considering, but in a nutshell – you want to be understanding the level of leads coming into your pipeline, how that compares to the sales targets your team has, and the reliability and efficiency of hitting your targets, as a repeatable, scalable sales function
What’s next?
Preparing for a Series B round is all about demonstrating that your startup is ready to scale, and that starts with strengthening your financial metrics. Investors will be scrutinising your revenue growth, gross margins, CAC and LTV, burn rate, and EBITDA, so make sure you’re optimising these key areas before entering discussions. By showing investors that your business is not only growing but doing so efficiently, you’ll position yourself for a successful Series B raise and the next stage of your startup’s journey.
Get in touch now for help with this vital stage of your journey, or any other of the stages, we’d love to help and know exactly what you’re going through.
