SaaS Metrics: Why they matter, what to track and how they drive capital raising
Love them or hate them, metrics make or break growth. Building strong metrics isn’t just good housekeeping, it's the foundation for raising capital and attracting acquirers. In this session, Clare Capital’s Mark Clare and Eliot Brown demystify the SaaS metrics that investors care about and how they flow into valuation.
Key themes:
Metrics Pyramid: who cares about what
(1) Top tier (Public/High-level); If you could only share three metrics, make them total revenue, annual revenue growth, and the Rule of 40 (revenue growth + profitability margin).
(2) Middle tier (Investors/Shareholders): Gross margin (80%+ is best-in-class for pure SaaS), EBITDA margin, churn rates, and revenue per employee. Mark noted: "Over the last 3 years, we've seen much more scrutiny on profitability for early-stage companies, flowing through from public markets."
(3) Bottom tier (Company-specific): These granular metrics by channel, monthly cohorts, revenue growth efficiency are critical for internal management and KPI tracking, but less relevant to external parties until due diligence.One metric that tells the whole story: the cohort analysis is perhaps the most powerful SaaS metric, particularly for companies with many customers. This tracks how revenue from customers acquired in a specific month changes over time, capturing churn, contraction, and expansion in one visual. "When we're talking to investors as part of capital raises, or probably more so in M&A, if we're talking to an acquirer, they want to see this, but not only do they want to see it, they want to have the data," Eliot explained.
The data quality problem: a recurring theme throughout the session was New Zealand companies' tendency to be "a little bit she'll be right" with metrics. Mark was blunt: "International investors and acquirers really want to see, want to make sure that the quality of information is high... you've got to have your numbers tied down." T
Clare Capital’s valuation framework rests on four pillars:
Total Addressable Market
Annualised Recurring Revenue
Unit Economics
Revenue Growth
Key Takeaways
Get your data house in order early.
Track cohort retention religiously if you have many customers. It's the single best window into the health and efficiency of your SaaS business.
Focus on the middle-tier metrics; these tell the story of your unit economics.
Understand the Rule of 40 evolution.
Scale matters for options. Below $1-2m USD ARR, high-quality capital and M&A conversations are difficult. Above $5m USD, options multiply. At $10m USD, international doors open wide.
Set up your P&L properly from day one. Use the structure that makes tracking SaaS metrics simple and consistent—your future self (and potential acquirers) will thank you.
Watch the full discussion and explore these insights in depth.