All the more now, Investors want the data that proves you can make your plan. For context, the struggle for investment capital among SaaS companies is always competitive, even under the best economic and investment conditions. But when times grow uncertain and market conditions become turbulent, the competition for investment capital grows even fiercer.
Under these conditions, it becomes especially important to have a story that concretely displays your company’s worth to investors. You might be asking how a compelling story can generate SaaS investment capital. Here are two of the best reasons:
Understanding and utilising the relationship between these three business components is how successful companies generate multiple rounds of investment capital.
Metrics act as your company’s compass. They help you get your bearings. They also give you a clear picture of your strengths and weaknesses so you can chart your path forward more effectively.
But there’s an added strategic component that SaaS companies often miss: MUD, or ‘Meaningful Underlying Business Dynamics’. There are dozens of SaaS metrics for different types of companies and brands. MUD helps you pick the right ones for your product by asking strategic questions such as:
As a SaaS CFO, asking questions like these will help you assess whether your strategy should prioritise growth metrics or efficiency metrics.
Growth metrics help you see how quickly you’re growing and forecast various growth and revenue scenarios. Efficiency metrics, on the other hand, allow you to track how effectively you’re operating to maximise resources.
Your primary growth metrics are your ARR and your MRR. Your efficiency metrics include your net churn rate, your net revenue retention, CAC, and other essential benchmarks about how well you’re operating outside of just getting signups.
Establishing and tracking your key SaaS metrics lets you objectively chart your marketplace performance. This is extremely important for two reasons.
First, it helps you identify where your company shines so you can focus on those areas in your brand storytelling. Second, it allows you to see where you’re falling short, so you can proactively improve those particular metrics and aspects.
Is your ARR impressive because your user retention rates are exceptionally high? You could weave that into your brand story to show investors that you can generate loyal, satisfied customers.
Does your SaaS company run primarily on group contracts? Maybe you could tell a story in your investment marketing collateral about when you landed a particularly large contract, which was even renewed the following year.
Whatever you decide for your particular business, the strategy here remains the same. Select your core metrics with the MUD approach we covered earlier, and then tell a story around those metrics that shows investors why your company will be able to succeed in the long run.
When crafting and telling your SaaS company’s story to investors, always keep two audiences in mind. The first is an external audience of investors. The second is an internal audience comprised of company employees.
It can be tempting to ask, “The investors are the people we need capital from, not our employees. Why should we waste valuable time communicating our story internally?”
If your co-workers and employees understand the company’s goals, primary metrics, and origin story, everyone can unite on the same page.
Whether you’re communicating your story internally or externally, make sure your communications around your company metrics and story are:
Everyone at the company will have a shared vision they’re all working toward in unison. Not just because they’re getting a pay check, but because they see why the company matters and how they directly contribute to its success.
Hopefully, this leaves you with a deeper appreciation of the role of stories in generating SaaS investment capital, and an understanding of how to generate capital using your own story.
The Akuna Solutions