Performance metrics are commonplace among tech companies. They allow internal and external stakeholders to understand how well the company is doing in an objective manner. In early-stage TechBio companies, due to the differences in technologies applied and evidence required to create a successful product, metrics are anything but like-for-like.
In SaaS companies, Key Performance Metrics (KPIs) used to track performance include Annual Recurring Revenue (ARR) growth, retention rate and Customer Lifetime Value to Customer Acquisition (LTV:CAC) ratio. These indicators are useful for the CEO and managers to understand what is working and where they should focus their attention. Likewise, for investors performing due diligence, these metrics give a quick insight on how the company is performing against its peers. The caveat is that these are simple heuristics and don’t guarantee the success or failure of a company. Instead, they can be seen as a guiding principle of what a company’s milestones might look like at different stages of its lifecycle.