Dear SaaStr: How Do I Show Investors I Have Traction?

To show traction to VCs and other investors, you need to focus on metrics and proof points that demonstrate growth, efficiency, and scalability.

Here’s how to do it effectively:

1. Revenue Growth: Investors want to see consistent growth in ARR or MRR. For early-stage SaaS, doubling or tripling year-over-year growth is ideal. If you’re at $1M-$2M ARR, you should aim for 3x growth to get investor interest. At $5M-$10M ARR, 2x growth is still the benchmark.

2. Sales Efficiency: Highlight your CAC (Customer Acquisition Cost) and payback period. A CAC payback of 12 months or less is a strong indicator of efficiency. Show that your sales and marketing spend is driving predictable and scalable growth.

3. Churn and Retention: Low churn and high retention are critical. Investors want to see strong NRR (Net Revenue Retention), ideally 100% or higher. If you can show that customers are sticking around and expanding their accounts, it’s a huge positive signal.

4. Cohort Analysis: Provide a cohort analysis to show how customer behavior improves over time. This helps investors understand your churn, retention, and customer lifetime value (CLTV). It’s especially useful if you’re early-stage and need to prove the stickiness of your product .

5. Lead Velocity Rate (LVR): This is the growth rate of qualified leads month-over-month. It’s a leading indicator of future revenue growth. If your LVR is strong, it shows that your pipeline is growing and you’re set up for continued success.

6. Customer Logos and Case Studies: Highlight key customers, especially if they’re well-known brands or leaders in their industries. Include case studies or testimonials that demonstrate the value your product delivers. This builds credibility and shows that your solution works in the real world.

7. Path to $100M ARR … and Beyond: Investors want to see that you’re thinking big. Build a clear model that shows how you can scale to $100M ARR and beyond. This could include expanding your TAM (Total Addressable Market) through higher ACVs, product expansions, or new market segments.

8. Operational Metrics: Include metrics like burn multiple (cash burn relative to ARR growth) and ARR per head. These show how efficiently you’re scaling and whether you’re managing your resources effectively.

9. Early Proof Points for TAM Expansion: If your TAM seems small, show how you’re expanding it. For example, launching an enterprise edition or a new product line can demonstrate your ability to grow beyond your current market.

10. Don’t fake it.  Explain it.  It’s too easy on a deep dive for investors to spot faction traction.  It’s hard at first glance, but easy to spot on a deep dive.

The key is to make it easy for investors to connect the dots. Present your metrics clearly, explain any anomalies, and show a credible plan for scaling. If you can combine strong growth with efficiency and a clear path to scale, you’ll have a compelling story for investors.

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And see everyone at 2025 SaaStrAnnual.com, May 13-15 in SF Bay!!