How top European VCs evaluate go-to market performance KPIs

Recently, we participated at an online event organized by HubSpot for Startups where leading European VCs discussed optimizing KPIs to secure funding deals and shared some insights based on their personal investment evaluations. 

The panel was led by Kaythlin Das and Eli Harb, representatives of the organizer entity, respectively joined by Maxence Drummond (Breega Capital), Said Haschemi (HV Capital) and Ferdinand Sigona (LocalGlobe).

Nowadays, venture capital (VC) has become a popular financing option for entrepreneurs with innovative projects. 

But securing a VC funding is not an easy task, there are several investment criterias that influence the final decision. Each firm has a complex valuation process, as the factors that come into play have a high diversity. It’s not just about the financial aspect, like balance sheets, forecasts and income statements, but there has to be taken into account also the industry in which the startup operates: analyzing the size of the market, the competitors, entry and exit barriers or even the startups’ maturity and development stage, all of these factors have an influence on the firm’s value. 

As a startup, nailing the go-to-market strategies is the key to growth, success and securing funding. VCs often focus not necessarily on the metrics, but much more importantly, on the meaning behind them. 

In the following part, we will highlight a few important KPIs and we will discuss the most common, current criterias that can make or break a VC funding deal. 

Total addressable market (TAM)

When thinking about qualifying in a good market, the very first number that people look at is the TAM, a number that shows the revenue opportunity available for a product or service. Getting this value can be quite challenging actually, and because of this, it can lead founders into making mistakes. 

The most common one is to pull the TAM form a market research report or to search for the biggest realistic and credible number that can be found regarding the startup’s market (given that the startup founders have clarity on which is that market). The reason why many people make this mistake is that big numbers are tempting, especially for VCs, as known, they like large values, because they need to believe that the amount of money being invested will be returned and the deal will bring back the highest profit possible.

As the speakers said, it’s important for founders to understand that there are better ways to make TAM estimations. For example, doing bottom up calculations will always pay off;  it shows that you are thinking and you have a great deal of understanding about whether you can match based on those numbers that you get. Moreover, this way you will also understand the numbers from the different kinds of reports, so you will know if they make sense or not.

As they have seen many startups pitch decks and have researched various markets, it’s very possible that the VCs have more clarity on the market size and will be drilling down and challenging your assumptions on this, so be prepared to explain your numbers.

KPIs which show whether the startup is doing well or not in its early stages

When giving a pitch with the aim to attract funding, it is hard to think of the perfect reporting set up or dashboard, that will show the investors that the startup has potential to grow and scale in the future. So if it comes to selecting some key KPIs, you should firstly think about those that give you a good feeling and it shows that the company is going in the right direction. 

Most of the time, these metrics will be related to the product itself: KPIs that help you validate whether the product is wanted by the market, KPIs that show if you are delivering the product at a reasonable or even profitable margin at scale, or KPIs that indicate the capability of finding and keeping customers. All of these show how sustainable your business is.

Indicators that show whether the acquisition channels are promising for a startup

The customer acquisition cost (CAC) can tell a lot about how a company is doing and this is why this metric is used also by investors to evaluate a startup. CAC, true to its definition, is the cost of convincing a customer to buy a product or service. 

Not being the only one doing that type of business or selling those products leads to every startup having its certain ways of doing customer acquisition, which can be compared not only over time (strictly related to one entity), but it can be compared as well to the existing competitors.

The investors use CAC to analyze the scalability of the startups. They can determine a company’s profitability by looking at the difference between how much money can be extracted from customers and the costs of extracting it.

Furthermore, it is essential to know in depth all the conversion rates at all stages of the sales funnel. This indicated that you mastered it and that you don’t have any issues getting qualified leads. This way investors can see if you’re doing a good job or not addressing the market and even if your customer buyer persona is built adequately and you are going after the right people. 


Overall, the techniques used by venture capitalists to evaluate investment opportunities differ from one to another and this is why it is hard to make a list of the steps that if followed, will increase the odds of getting funded.

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