The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 20 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Alter: Index passed on a $10M ARR startup lacking metrics clarity
“The business was ten million in ARR, they were tripling year on year, they had a 150% net dollar retention, 95% gross dollar retention, And they were burning the same amount that they were adding in net new ARR during that year. We ended up passing on the busi…”
Alter: Later-stage investors want line of sight to 20-30% FCF margins
“Many investors, particularly at later stages, want to see a line of sight to 20 to 30% free cash flow margins.”
Alter: $30k ACVs Are Not a Valley of Death for SaaS
“There's a common misconception that thirty-k ACVs are the valley of death, and that no big businesses have been built with thirty-k ACVs. I think this is absolutely wrong, and we have plenty of examples now. Avalara, or even like One Trust being examples.”
Alter: Granular command of imperfect metrics positions founders well to fundraise
“What the big takeaway from this presentation should be is that it's not just the metrics themselves that matter, but it's your command and your control of these metrics that will make a big difference. And it's pretty empowering because nobody will have perfec…”
Alter: Reaching $1M ARR within one year post-launch is very good
“So from one year after launch to get to one million in ARR would be considered very, very good. Nine months is excellent. This is from launch, not after incorporation.”
Alter: T2D3 growth is considered best-in-class after reaching $1M ARR
“And then after that, triple, triple, double, double, double is considered best in class. But again, I want to emphasize that all of this should be taken in conjunction with the broader picture on metrics.”
Alter: A 1:1 ratio of net new ARR to burn is excellent
“And I think one of the most interesting metrics to track with burn is just your net new ARR divided by your burn. And some people do it the other way around. They do your burn over your net new ARR. Generally speaking, around one is considered very good.”
Alter: Index Ventures advises portfolio companies to maintain 24 months of runway
“So we've adjusted at Index our own guidance around this to extend runway as much as possible, ideally to 24 months, which should give everyone enough time to ride out different market fluctuations and continue to grow and optimize other metrics as well.”
Alter: High NDR with low GDR signals selective product-market fit
“What that tells an investor is that some of your customers are doing exceptionally well with your software. They're upselling in a massive way. But others are not having product market fit at all, and they're falling off. This is really good to know. It's a pr…”
Alter: Show cohort retention only after major timestamped product changes
“For enterprise software businesses, I recommend that you show cohort retention, cohort based retention, if you've had time stamped changes. So for instance, let's say you made a big change to your product in September of 2020, and after that change, you've see…”
Alter: CAC payback and 3-year LTV-to-CAC are top sales efficiency metrics
“The two most important ones are CAC payback period in months, and three year LTV to CAC.”
Alter: Paycom achieved best-in-class CAC payback by hiring inexperienced sales reps
“They took their sales reps they took their sales rep model and threw it out the window, and instead of hiring experienced reps from other companies who had sold that kind of software before, which you think would be pretty rational, they instead decided to hir…”
Alter: Vertical SaaS companies gain unfair sales efficiency from tightly networked word-of-mouth
“And this is one of the advantages of vertical SaaS businesses in general. They have a really defined sales universe where people talk. So they got a couple of key logos using their platform, and then all of those businesses went and told all their other friend…”
Alter: Combining gross dollar and logo retention is criminally underrated
“Having these two together is absolutely crucial, in my opinion, and it's criminally underrated. You would be really surprised how few people ever cite this metric when I think it's one of the key underlying drivers of business health.”
Alter: ARR should represent at least 80% of enterprise ACV
“On the first, I'd say 80% plus would be a good benchmark. Anything below that there should be a really clear reason or a really clear understanding for why that is the case.”
Alter: Venture investors treat total contract value metrics with skepticism
“Investors have began to take this with a grain of salt, particularly in today's market. Nothing is for sure.”
Alter: Investors value non-SaaS revenue if not falsely labeled as ARR
“I don't think anymore that investors are so myopic That they're only valuing companies based off of ARR. You will get credit for those alternative streams of revenue as well, but it's important to clearly label it and not try to make it into ARR when it's not …”
Alter: Net new ARR differentiates accelerating SaaS companies from linear growth
“And it's important to emphasize net new ARR. And this is what differentiates a company that's growing linearly from a company that's accelerating.”
Alter: 160% NDR yields 4.2x growth over 120% NDR over five years
“And when the NDR was one 60% versus 120%, the company grew 4.2 times over a five year period.”
Alter: Revolut had a negative gross margin when Index Ventures invested
“When we invested in Revolut, they had a negative gross margin, and it was something that we saw the founder be really attentive to over time, and he made decisions over the, ah, over the reoccurring occurring years that helped push this margin up to the place …”