SaaS Brief

How SaaS Companies Can Tell Their Story to Investors

Investor Presentation

All the more now, Investors want the data that proves you can make your plan.  For context, the struggle for investment capital among SaaS companies is always competitive, even under the best economic and investment conditions. But when times grow uncertain and market conditions become turbulent, the competition for investment capital grows even fiercer. 

Under these conditions, it becomes especially important to have a story that concretely displays your company's worth to investors. You might be asking how a compelling story can generate SaaS investment capital. Here are two of the best reasons: 

  • Stories provide a "human element" to your company. To attract investment capital and keep it rolling in for the long term, you need to ensure that you're not just a faceless corporation. A strong origin story or guiding mission will help you accomplish this if it's communicated well to others.
  • Stories differentiate you in the marketplace. Taking the time to encapsulate your brand in a story shows investors and customers alike that you're willing to go the extra mile. It communicates a level of polish and finesse that goes beyond simply putting out products.

Understanding and utilizing the relationship between these three business components is how successful companies generate multiple rounds of investment capital.

First Things First: SaaS Metrics & MUD

Metrics act as your company's compass. They help you get your bearings. They also give you a clear picture of your strengths and weaknesses so you can chart your path forward more effectively. 

But there's an added strategic component that SaaS companies often miss: MUD, or Meaningful Underlying Business Dynamics. There are dozens of SaaS metrics for different types of companies and brands. MUD helps you pick the right ones for your product by asking strategic questions such as:

  • What primarily drives our revenue? Are we targeting individual users month-by-month or seeking longer-term contracts with larger teams or corporations?
  • Where are we in the corporate lifecycle? Are you a young company seeking strong and rapid growth? Or are you an established operation looking for a more steady and reliable trajectory? 
  • Do we experience predictable peaks and valleys? Does seasonality play into your business, or do you experience any other repeating cycle of customer onboarding and churn spikes? 

As a SaaS CFO, asking questions like these will help you assess whether your strategy should prioritize growth metrics or efficiency metrics.

 

Growth metrics help you see how quickly you're growing and forecast various growth and revenue scenarios. Efficiency metrics, on the other hand, allow you to track how effectively you're operating to maximize resources. 

Your primary growth metrics are your ARR and your MRR. Your efficiency metrics include your net churn rate, your net revenue retention, CAC, and other essential benchmarks about how well you're operating outside of just getting signups. 

Know How You Rate (And Seek Improvement)

Establishing and tracking your key SaaS metrics lets you objectively chart your marketplace performance. This is extremely important for two reasons. 

First, it helps you identify where your company shines so you can focus on those areas in your brand storytelling. Second, it allows you to see where you're falling short, so you can proactively improve those particular metrics and aspects. 

Is your ARR impressive because your user retention rates are exceptionally high? You could weave that into your brand story to show investors that you can generate loyal, satisfied customers. 

Does your SaaS company run primarily on group contracts? Maybe you could tell a story in your investment marketing collateral about when you landed a particularly large contract, which was even renewed the following year. 

Whatever you decide for your particular business, the strategy here remains the same. Select your core metrics with the MUD approach we covered earlier, and then tell a story around those metrics that shows investors why your company will be able to succeed in the long run.

Communicate Your Story Internally & Externally

When crafting and telling your SaaS company's story to investors, always keep two audiences in mind. The first is an external audience of investors. The second is an internal audience comprised of company employees. 

It can be tempting to ask, "The investors are the people we need capital from, not our employees. Why should we waste valuable time communicating our story internally?" 

If your coworkers and employees understand the company's goals, primary metrics, and origin story, everyone can unite on the same page. 

Whether you're communicating your story internally or externally, make sure your communications around your company metrics and story are: 

  • Balanced. Use a selection of metrics that will allow you to maintain a crystal clear picture of business developments and shortfalls. 
  • Preemptive. Proactively identify areas that need improvement, and outline a plan to improve them. 
  • Detailed. Being specific about your metrics and performance allows you to better highlight your strengths and chart a course to correct your mistakes.

Everyone at the company will have a shared vision they're all working toward in unison. Not just because they're getting a paycheck, but because they see why the company matters and how they directly contribute to its success. 

Summing Up

Hopefully, this leaves you with a deeper appreciation of the role of stories in generating SaaS investment capital, and an understanding of how to generate capital using your own story. 

But if you'd like to delve deeper into how SaaS storytelling generates capital, check out this webinar session from the Modern SaaS Finance Summit to learn even more.

Tell Your Story to Investors Webinar Banner

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