G7: The Seven SaaS Metrics Georgian Uses to Evaluate Growth-stage Software Companies

This post is by Evan Kerr from Georgian

At Georgian, we invest in high-growth technology companies that harness the power of data and trust. We also build our own software that helps us identify and accelerate these companies. It’s no surprise then that we are passionate about both the data and the metrics we use to explain our view of financial success to current and future partners.

Last year, we simplified and strengthened the benchmarks we use to evaluate the health of growth-stage software and technology companies. We analyzed data from 100+ technology IPOs and private benchmarks during this process, including OpenView, KeyBanc Capital Markets (“KBCM”) and Scale Venture Partners. Collectively, these sources cover over 2,000 growth stage software companies. We then back-tested that data against the 50+ companies in our portfolio to determine the “top” metrics that helped define our own companies’ success. 

Introducing the G7 Metrics

Coming out of this work, we created a new framework composed of the seven most important metrics that we use to evaluate the strength of a growing technology company. We call it the “Georgian 7” or “G7” for short. Unlike the other G7, there have always been just seven core metrics, and we haven’t yet had to expel a metric for rogue behavior…though, you never know. 

So what are those metrics? 

The G7 Metrics

  1. ARR Growth YoY (ARR = “Annual Recurring Revenue” Year Over Year)
  2. EBITDA Margin excluding SBC (SBC = “Stock-Based Compensation”)
  3. Gross Dollar Retention
  4. Net Dollar Retention
  5. Capital Efficiency
  6. Gross Margin CAC Payback (CAC = (Read more...)