What institutional investors look for, and what founders still get wrong
Founders often obsess over the wrong fundraising question: which metrics they need for Series A or B.
Investors are asking something else entirely. They want to know whether the business has proven it can grow without breaking.
Institutional rounds aren’t unlocked by hitting a magic ARR number or screenshotting a tidy dashboard. They’re unlocked when your metrics tell a coherent, credible story about demand, efficiency, and scalability.
This article is more a reality check than a generic KPI checklist. We’ll walk through the signals investors actually use to judge readiness for Series A and B, the benchmark ranges that matter in practice, and how those metrics are interpreted together, rather than in isolation.
If you’re raising soon, this is how potential investors will look at your numbers, whether you like it or not.
Most VCs won’t say this explicitly, but their analysis usually comes down to four questions.
Every metric that matters ladders up to one of those questions. Everything else is noise.
“Great companies don’t just grow fast, they grow efficiently and predictably” - Jason Lemkin
Revenue is still the anchor metric for Series A and B, but what investors are really interrogating is how you got there.
For SaaS companies, most Series A rounds still happen around £1m to £3m ARR, with strong year-on-year growth. OpenView’s SaaS benchmarks show that raising at $1m to $2m ARR is far more common than founders expect.
Series B typically comes later, once revenue passes £5 to £10m ARR and growth has proven durable across multiple quarters.
What raises eyebrows is being erratic. Spiky growth driven by one channel, one deal, or one founder-led motion doesn’t de-risk the business. It concentrates risk.
Investors want to see that revenue growth is becoming less fragile over time, not just bigger.
If there’s a metric that quietly determines whether a round feels easy or painful, it’s net revenue retention.
NRR tells investors whether your existing customers make the business stronger or merely keep it alive. A company with modest top-line growth but expanding customers often looks healthier than one growing fast while leaking value underneath.
At Series A, NRR around 100% is often acceptable. By Series B, expectations harden. According to Bessemer’s State of the Cloud, top-performing SaaS businesses consistently show NRR above 120%.
Retention is the clearest possible proxy for product–market fit, because customers vote every month with their budgets.
“Rate of sale is your truth-teller. Repeat purchases are what build a brand. That’s when people vote with their wallets again and again. The rate of sale determines whether your product has real traction or not.” - John Stapleton, co-founder of New Covent Garden Soup and Little Dish.
Flat or declining NRR forces you to keep feeding the acquisition machine just to stand still. Investors know exactly how expensive that gets.
Founders often freeze up on unit economics because their numbers aren’t textbook perfect yet. That’s rarely the real issue.
What matters is whether your economics are understood, improving, and defensible.
Most institutional investors still expect lifetime value to be meaningfully higher than customer acquisition cost, typically around a 3:1 ratio for SaaS, but they’re far more interested in how fast you’re getting there.
The same applies to CAC payback. Under 18 months is generally seen as healthy; under 12 months is exceptional.
If your LTV:CAC is weak but trending strongly in the right direction, that’s often fundable at Series A. If it’s static and unexplained, it’s not.
The era of growth at any cost is over. One of the most widely used measures today is the burn multiple, popularised by David Sacks: net burn divided by net new ARR.
A burn multiple less than 1 suggests exceptional efficiency. Between 1 and 1.5 is generally healthy. Once you drift above 2, investors start asking whether growth is being bought rather than built.
This matters more at Series B than Series A. By that stage, capital is supposed to accelerate a system that already works.
One of the most common mistakes founders make before a raise is hiring ahead of proof. Investors spot this instantly.
They are impressed by evidence that the motion itself works, shown by consistent conversion rates, stable sales cycles, and a clear understanding of who buys, why, and through which channel.
A common reason Series A momentum stalls is that sales still run through the founders. Until that dependency is broken, adding headcount only amplifies inefficiency.
Series A proves the motion. Series B proves it scales.
Here’s the part founders rarely model but investors absolutely assess.
Can this company absorb capital without tearing itself apart?
Metrics don’t live in a vacuum. Investors look for signs that ownership, incentives, and accountability are aligned, or at least consciously designed.
Founder bottlenecks, unclear decision rights, and misaligned incentives introduce execution risk that no dashboard can offset.
This is where equity structures, incentive design, and long-term alignment quietly matter. A business that has thought seriously about how value is shared tends to execute more predictably than one where everything still runs through the founders’ heads.
Investors may not say this directly, but they fund teams they believe can stay aligned under pressure.
If your numbers feel close but not quite there, resist the temptation to dress them up.
Focus instead on tightening the underlying system: improving retention before chasing more leads, clarifying your sales motion before adding headcount, and demonstrating efficiency trends rather than snapshot perfection.
Most failed raises don’t fail on absolute metrics. They fail because the story those metrics tell doesn’t hold together.
Series A and B investors aren’t looking for flawless businesses. They’re looking for businesses that feel inevitable.
When growth, retention, efficiency, and organisational clarity reinforce each other, fundraising becomes a confirmation exercise rather than a debate. When they don’t, no amount of metric theatre will save you.
Pressure-test your metrics as a system, not a set of isolated KPIs. If you can’t clearly explain why they look the way they do, and how they improve with scale, investors will find the gap long before you do.
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