From Series A to Exit: Mastering Metrics
1/8: Understanding Investor Expectations
5 Min Read – What You’ll Take Away
How to Build Investor and Buyer Appeal: lower burn rates, better unit economics, and a clear path to profitability.
How to Structure Your Raise: avoid over-subscribing or inflating valuations. Raise only what’s needed to hit your next key milestone.
How to Make Every Dollar Count: deploy capital strategically become the apple your investor or buyer will want to bite into 12-18 months from now.
From Series A to Exit: Mastering Metrics
Be it as an executive, advisor, or investor: I’ve experienced too many promising startups hit a financial wall. Not because they didn’t have brilliant teams or great products but simply because they didn’t focus on the right metrics.
Some didn’t survive, others scrambled for funding under pressure, and a few managed to course-correct just in time. Despite what you may think, the recipe for reaching your next financial milestone doesn’t have to be a black box. Whether you’re raising another round or planning to cash out - in “From Series A to Exit: Mastering Metrics”, we’ll break down what it takes to position your business as an attractive investment.
Each article in this series focuses on getting your core functions in shape:
Understanding Investor Expectations,
Customer Retention,
Finance,
and People.
Co-authored with experts in their fields, their insights will help you meet and exceed investor expectations. In addition to my own experience, my co-authors draw on their success stories from the likes of Uber, Booking, Dropbox, LinkedIn, Just Eat Takeaway, Lightspeed, Miro, EasyPark, Bynder, Squarespace, BlackRock, JP Morgan, Ares, and more.
Before we get to how the gravy is made, however, let’s first lay the foundation - breaking down the key metrics building up investor and buyer appetite.
What Do Investors and Buyers Look For?
While the market may feel like a moving target at times - philosophically - the core milestones haven’t really changed. Whether you’re gearing up for your next funding round or aiming for an acquisition - it all boils down to hitting a few critical metrics. The below table gives a rough overview of key metrics and benchmarks your business needs to achieve to qualify for the next round. Granted, investor expectations have become more stringent post-pandemic.
Exceptions usually prove the rule (you might get away with a slower CAC payback in case of lower churn/ longer LTV; or less GMV if your take-rates look extra promising) but the table gives an indication on where to spend your runway if you want to make it to the next round.
Not all revenue is equal: just think levels of predictability on recurring vs re-occuring revenue or Warren Buffet's "economic moats" (i.e. barriers of entry and competitive advantage). Those differentiations on revenue and unit economics will have an effect on your investor appeal as well as your valuation (i.e. price/ revenue multiple).Not included in the table, there is something to be said about a variety of profitability metrics. In my opinion, however, talking LTV (i.e. LTV/ CAC ratio) doesn’t make much sense in any early stage venture with practically infinite customer lifetime - metrics like EBITDA margins, ARR/ FTE, or Rule of 40 only become relevant once we shape a path to profitability. No need to worry though: we’ll dive into all of these in our Finance segment. For those of you who want to benchmark themselves today, have a look at Fortino’s 15 Magic Metrics.
Although you should regularly check your current investors’ appetite for another injection anyways, do so especially, if you feel you won’t hit the mark in time and might need to raise a bridge round (more on that later).
Why You’re Not Doing an IPO
If you’re aiming for an IPO, my articles won’t cut it - time to call your banker. When you’re gearing up to win over retail investors, the fundamentals remain the same but the strategy shifts. Building broad brand appeal and showcasing technology so simple even your grandmother understands its value, is an entirely different ballgame.
‚Private investors often favor the CEO - the public market, however, will grill you.‘
Eliran Glazer (CFO; Monday.com)
With over 95% of all SaaS exits being consolidations, however, it’s likely you’ll sell to the competition (horizontally) or someone trying to integrate vertically. Therefore, this series is specifically for those gearing up to raise their next round or to negotiate a sale.
Bridge Rounds – And Why You Shouldn’t Do One
When it comes to raising, there isn’t just the traditional trajectory. Having existed forever, so called bridge rounds have become more and more popular since the pandemic. Often raised as convertible debt or equity, they are a form of short-term financing to extend runway and buy time to achieve critical goals before the next funding round (see above table). Their popularity surged post-pandemic as VC funding slowed significantly - especially in later rounds.
Startups have since used them to avoid down rounds, meet higher investor expectations (see above table: stronger focus on burn rate and use of funds), and focus on scaling.
While they can be a lifesaver - bridge rounds come with significant risks: they often signal weakness - multiple bridge rounds definitely indicate trouble, they are expensive - coming with high interest and dilution, and they often represent the beginning of the end - if goals aren’t met, securing future funding might turn out to be a Mission: Impossible. Investors, executives, and the board must therefore make sure the funds are used strategically to quantifiably progress towards the next funding milestone.
There are numerous examples of bridge rounds gone wrong. Once high-flying (pun intended) over the Dutch tech landscape, TravelBird serves as one of those cautionary tales of a company going belly-up after multiple bridge rounds. The Online Travel Agency (OTA) first soared with rapid expansion but finally crashed in 2018 - filing for bankruptcy after failing to secure the funding needed to stabilize its financials.
Give And Take
On the other end of the spectrum, however, there is also something to be said about finding the right valuation and - even if tempting - not taking more money than you need. Unrealistically high valuations during the pandemic are one of the main reasons why we’re talking bridge and down rounds in the first place. Given more stringent investor expectations, carrying the baggage of a high valuation makes future raises additionally difficult.
When trying to get to the right number, I advise founders to genuinely balance ambition with achievable milestones. Especially in the current climate: benchmark your valuation against comparable companies, look at your past performance against above metrics, size the opportunity at hand, and balance your ambition with no-frills reality. Make sure your valuation reflects both your current performance and the milestones you plan to achieve until your next raise. Conservative does it: better to over-perform than fall short of your promises - especially early on.
Unfortunately, most learnings come from mistakes. During the pandemic, my angel fund THIRTYONE CAPITAL backed Sprinque, a B2B payment company we felt was poised to disrupt the Buy Now, Pay Later (BNPL) market. Caught up in the excitement, we signed a term sheet granting a €5M+ pre-money valuation - before the product was even built. Despite the team’s hard work and promising traction over the next three years, the warning signs soon appeared: a stagnant round, followed by a down round, and ultimately, the company’s collapse. In hindsight, that inflated early valuation was at the root of its downfall - creating expectations the business simply couldn’t keep up with. Sprinque eventually wound down in late 2024.
Side Note: a best practice from IPOs is to price a share below its estimated intrinsic value to make sure investors have enough upside potential. The same goes for your valuation when raising a round.Don’t Take the Bag
With the valuation set, there is the question of how much to raise. Many founders can resonate with the champagne-problem of surplus investor demand. Don’t let this blind you: remain strict and think about how and when you want to raise again or exit - then work your way back (and add 20% for flexibility).
Whether you’re looking to maximize your raise or are eager to include that one last-mover investor: over-raising dilutes equity unnecessarily and puts pressure on future rounds. You’ll also run into growth-pains sooner since your budget didn’t include the right insights and strategies on how to allocate the additionally raised funds. Investors want to see a clear plan for deploying their money effectively to achieve measurable results: think improving unit economics or expanding market share.
My Take: focus on the amount required to hit key metrics for your very next raise - then cross that bridge when you get there. Even if you feel like a lottery winner raising a big round: this is neither the time to feel overly accomplished nor where the real money is made!
Don’t worry about turning investors away by closing your round - if they’re the right fit, they’ll be around for your next raise. If you’re worried about missing out on their brains, offer them a guaranteed slot in your next raise - most serious investors are happy to share advice even without being on your Cap Table. In the meantime, make sure to keep them engaged, share updates on milestones, metrics, and overall progress to keep them excited about your journey.
In the spirit of best practices, there is the example of Orq.ai - a collaboration platform designed to streamline the development and deployment of AI applications. Having come little too late to the party with 31CAP, Orq.ai turned us down to avoid over-subscription - a textbook example of disciplined fundraising done right.
Hitting the Mark
With fundraising wisdom out of the way, how do we best deploy the capital?
Knowing the expected metrics is one thing, hitting them is another. Simply said, this is how I break it down:
Raising funds is about…
De-risking: provide confidence and certainty about your future performance;
Offering upside: show an opportunity worth the risk of investing.
Selling your business is about…
Positive ROI: demonstrate you’ve reached a critical mass of customers and/ or developed unique IP. Both creating a moat so strong, acquiring the business is far easier (and more economically sensible) than trying to replicate either;
Cultivating FOMO: create urgency through commercial momentum and buyer competition. Acquiring your company needs to feel like a rare, time-sensitive opportunity nobody can afford to miss out on.
Over the course of this series, we'll dive into and share some of the best practices and learnings we've had hitting those marks. We’ll stay relevant to both: raising your next round and preparing for an exit (see: Coming Up).
What to Take Away
Whether you’re 18 months away from your next milestone or just starting to consider the possibility - working towards and focusing your business on market expectations now is absolutely critical. Each article in this series will include at least three key takeaways and actionable steps to help you prepare - no matter your current stage.
Putting my money where my mouth is - hereby today’s take-aways:
How to Build Investor and Buyer Appeal:
It’s not a mystery: expectations are fairly clearly outlined - orientate your business towards them.
Demonstrate progress on critical metrics like customer growth, unique IP, and scalability to attract investors or buyers.
Align with post-pandemic expectations: lower burn rates, better unit economics, and a clear path to profitability.
How to Structure Your Raise:
Set balanced valuations and raise only what’s needed to hit your next key milestone.
Avoid over-subscribing or inflating valuations - they lead to future challenges.
Use bridge rounds only if you have a measurable plan to meet the next funding milestone.
How to Make Every Dollar Count:
Deploy capital strategically to improve metrics like churn, CAC payback, and NRR.
Focus on hitting milestones that position you for your next round or an acquisition - be the apple your investor or buyer will want to bite into 12-18 months from now.
Coming Up…
The following 6 articles dive into the core business areas driving the most relevant metrics. Together with experts in their fields, we will help you get each business unit in shape for your next financial milestone.
Discover the most common mistakes and bottlenecks holding back your Sales and Marketing efforts - and how to overcome them. We’ll dive into the hardest metrics to master and share proven strategies and best practices that move their needle. You’ll get access to actionable tools and frameworks you can start using today to refine your Product-Market Fit, lower your CAC, build a standout brand, and drive your GTM to global scale.
Learn how to build a product infrastructure that not only supports your own growth but addresses concerns of potential buyers - like IP protection, ease of integration, and technical scalability. We’ll touch on the balance between visionary innovation and customer-driven iteration to strengthen Product-Market Fit, expand your TAM, and create stickiness that drives long-term growth.
Forging great customer relationships is just the beginning. Learn how to build true retention machines: understand and forecast churn triggers, drive stickiness through integration partnerships, and grow NRR drawing on proven land & expand strategies.
Your customers, product, or brand may trigger an appetite. But your financials can make or break any successful raise or sale. Learn how to optimize CAC payback, fine-tune your spend and unit economics, and maintain clean financials to ensure your numbers tell the right story. We’ll also find time to dive into critical profitability metrics like EBITDA Margin, CAC/ LTV, ARR/ FTE, and the Rule of 40.
Any business is only as great as the people who propell it forward. Learn how to expand and align your leadership team, attract the talent you need for your next phase, and retain key personnel critical to your success. We’ll explore how to evolve your organizational design, build a culture that thrives through growth and change, and prepare for the challenges of post-merger integration (PMI).
If you need support or have questions positioning yourself for fundraising or an exit, I’m happy to help you navigate these waters. With years of experience advising entrepreneurs and leading businesses through multiple successful exits, I bring a unique toolbelt with frameworks, strategies, and best practices.
Let’s connect and explore how we can set you up for your next major milestone.