The KPIs for sales growth graphic—based on a SaaStr podcast interview with Kristina Shen, a Partner at Bessemer Venture Part- ners—sets out some of the KPIs and rules that investors follow when it comes to company value: KPIs for sales growth Drivers of company value Velocity of Efficiency Retention growth • Best cloud companies scale from €1 to €10m Annual Recurring Revenue (ARR) in 2 years • Average cloud companies scale from €1 to €10m ARR in 3 years • Rule of 40 - established, later stage, public companies: Growth in % + Profit in % is equal or greater than 40 (i.e. you can grow by 30% and have a 10% profit or even grow by 100% and have a 60% loss = both equal 40%) • Rule of 70 - for fast-growing private companies in Series A/B, around 2 years before going public: Growth in % + Profit in % is equal or greater than 70% • ARR measures revenues - what should be measured instead of ARR is the velocity of growth: How fast are you adding new customers AND retaining existing business • Capital efficiency is important and can be measured: For a company with less than €20m in revenue, the ARR should be greater than the amount they burn in the same period Example: Revenue growth from €10m to €20m; burned €20m to do this = €10m gain/€20m cost = 0.5 efficiency score; Bessemer Venture Partners aim for an efficiency score of 1 • Burn less capital each month to acquire additional revenue; this is particularly valid for Series B companies Source: Kristina Shen, Bessemer Venture Partners Source: SaaStr podcast 176 https://player.fm/series/the-official-saastr-podcast-saas-founders-investors/saastr-176- what-saas-startups-need-to-raise-a-series-a-today-why-we-need-a-new-framework-to-think-about-saas-multi- ples-and-how-the-rule-of-40-changes-with-scale-with-kristina-shen-partner-bessemer-venture-partners 43