Beyond the $10M ARR Mark: A Framework and Benchmarks To Assess Revenue Quality with Speedinvest

1. Looking Beyond the $10M ARR Mark

2. Looking Beyond the $10M ARR Mark:
A Framework To Assess Revenue Quality

3. Speedinvest - who we are
We are a leading European seed investor since 2011
Offices in Vienna, London, Berlin,
Paris & Munich
Writing initial cheque sizes of
€200k - 2M
Pan-European Seed Investor
spread across six sector-
focused teams:
40 investment pros
- Marketplaces
& Consumer
- SaaS
- Fintech
- Digital Health
- Industrial Tech
- Deep Tech
in our portfolio, spread across 30
countries
Supported by our Platform+ team
of growth, business development
and HR experts.
250+ companies

4. <<<<<< <<<<<< <<<<<< <<<<<< <<<<<<
We love SaaS
At Speedinvest, we have invested in over 60 SaaS companies, a small excerpt below.
Application Layer API Layer Software
Infrastructure
Security Developer tools

5. 2023 has been a tough year for fundraising
Global quarterly VC Investment ($)
US$m
$ 50B
$ 100B
$ 150B
$ 200B
$ 250B
2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1

6. Good fundamentals matter again!

7. SaaS public market multiples have sharply declined
Public market multiples have declined last year and the trend will likely continue
0
2
4
6
8
10
12
14
16
18
2017 Q2 2018 Q2 2019 Q2 2020 Q2 2021 Q2 2022 Q2
15.2x
7.1x

8. The most common reasons to pass from Series B onwards
remain unchanged
High monthly
gross churn
Low YoY
revenue growth
Slow CAC
Payback
Poor gross
margins
1 2 3 4

9. So what are investors really looking
for in 2023?

10. Introducing the Speedinvest Revenue Quality Framework

11. The Qualitative – not all revenue is created equal
Stage of customer – early vs late-stage
companies
Departments – innovation departments or
business unit / P&L function
Sector – especially sector concentration and
sector risk
Strategic interest – long-term incompatibility of
interests
Recurrence – recurring as opposed to one-off
revenue
Duration – yearly, monthly or even multi-year
contracts
Pilot – POCs connected to milestones may be
discounted
Delivery model – How big is the service
component and the onboarding
Customer Types Contract Terms

12. Active Users – number of users who achieve a
certain product goal
DAU/MAU or DAU/WAU – percentage of active
users who log in per day / week
Power Users – users who log in X times per
period Y or similar definition
Stats 101 – descriptive statistics of your customer base
Revenue Concentration
Gross margin – commonly revenue minus
Cost of Goods Sold
Distribution– how many customer make up
what percentage of revenue
Customer Engagement Margin Structure

13. Ratios & efficiencies – benchmarking yourself
Growth – The one metric that matters
most. Growth is the primary indicator of
product-market fit
Net revenue retention –NRR measures the
revenue generated accounting for churn,
contraction, and expansion.
Sales productivity – Many ways to
measure but ultimate goal understanding
new ARR per dollar spent on sales
Burn multiple – ratio of burn and net new
ARR as indicator of burn per incremental
dollar value
Hype ratio – wildcard one. Capital raised
divided by ARR
1
2
3
4
5

14. So what does good look like?

15. Benchmark
bit.ly/si-revenue

16. Key Takeaways
§ Good VCs will use a broad lens
to access a business and so
should you as a founder
§ Our framework splits revenue
into qualitative and quantitative
factors
§ You probably won’t excel in
every metric
§ A lot of these measures are
interlinked and should be
looked at jointly
§ In combination they give a good
overview over revenue health

17. Thank You