Critical Metrics Investors Analyze for Later-Stage Funding Rounds

Author

Ryan Chen
March 10, 2025

Hey there,

Welcome to the Capital Growth Partners newsletter. It is approximately a 4-minute read.

In today's newsletter, we will go over some best practices after you exit.

In today’s newsletter, we’re going to go over the most critical metrics investors analyze when considering later-stage funding rounds (Series B and beyond).

  1. Revenue metrics

  2. Profitability & unit economics

  3. Market & competitive position

  4. Financial efficiency & cash flow

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Actionable Tip

If you’re raising later-stage capital, focus on predictable revenue growth—investors care more about ARR and retention than vanity metrics.

The best way to improve investor confidence is by optimizing unit economics (LTV > CAC ratio should be at least 3:1).

Investors will look at your burn rate and runway—make sure you have a clear strategy to extend cash flow beyond 12 months.

When you scroll down, I’m going to point out the key metrics so you can have it in place when making your pitch.

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Revenue Metrics

  • Annual Recurring Revenue (ARR) – Critical for SaaS and subscription-based businesses. Investors want to see strong, predictable revenue.

  • Revenue Growth Rate – Investors analyze YoY or QoQ growth to assess scalability.

  • Gross Merchandise Value (GMV) – Important for marketplaces and e-commerce businesses.

  • Revenue Retention (Net & Gross Dollar Retention) – Investors prefer companies with high revenue retention and low churn.

Profitability & Unit Economics

  • Gross Margin – A core indicator of operational efficiency.

  • CAC vs. LTV – The LTV/CAC ratio should be at least 3:1.

  • Payback Period – The shorter the time to recover CAC, the better.

  • EBITDA Margin – A key indicator for businesses preparing for IPOs or acquisitions.

  • Operating Leverage – Investors want to see costs growing at a slower rate than revenue.

Market & Competitive Position

  • Market Penetration & TAM (Total Addressable Market) – Investors analyze how much of the market your company has captured and the remaining growth potential.

  • Moat & Differentiation – Proprietary technology, network effects, or strong brand recognition add defensibility.

  • Churn Rate & Expansion Revenue – Low churn and high upsell revenue signal long-term sustainability.

Financial Efficiency & Cash Flow

  • Burn Rate & Runway – Investors need to know how much cash you’re burning monthly and how long you have before another funding round is needed.

  • Free Cash Flow (FCF) – Healthy cash flow signals strong financial fundamentals.

  • Debt & Leverage Ratio – Investors evaluate financial obligations and the company’s ability to manage debt.

How I Can Help You

If you like this newsletter and want to work with me, there are a few ways we can do so:

  1. You can book a meeting to work with my firm, Capital Growth Partners (link)

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