What drew North Bridge Growth Capital’s Holly Maloney to Durham to meet and eventually invest in digital textile printing company Spoonflower was its impressive revenue growth, capital efficiency and lack of venture capital.

Ian Sigalow likes software-as-a-service companies outside the typical tech hubs of San Francisco, New York and Los Angeles—making locals Validic and Netsertive a good fit for his Greycroft Partners of New York.
And Comcast Ventures’ Jonathan Drillings likes to invest in companies across the technology spectrum but mostly those in which Comcast or NBC Universal can play a role strategically. He’s most focused on B2B companies like Durham portfolio company Windsor Circle.
All three venture capitalists with Triangle interests agree that a certain set of metrics are critical despite the company, industry, technology, location or management team. They provided those insights during an afternoon panel discussion at the Internet Summit in Raleigh Wednesday.
For Maloney, it’s all about customer acquisition and retention and how the business is monetizing those customers. She’s interested in top line revenue growth as well as monthly or annual recurring revenue, in the case of subscription businesses. For North Bridge, it’s also critical to measure the lifetime value of a customer—a relationship that includes more dollars spent over time and that is worthy three to four times what it costs in sales and marketing to acquire that customer.
Sigalow wants the “triple triple double double,” revenue that is growing from $2 million to $6 million and is capable of continuing to double and triple. That means the market has to be large enough—his firm attempts to compute a business’s potential size. If it proves to be a big enough opportunity, that’s when Greycroft begins a conversation with a startup. Sigalow is focused on what will ensure a positive eventual exit event.
“In order to go public, you need to be growing very fast in a very big market,” he says. But the more common outcome is M&A by a large public company. In that case, growth must be happening fast to make an acquisition worthwhile for a slow growth company. He points out that the S&P 500 has an average growth rate of negative three percent.
“It’s not enough to build an interesting $10 million to $50 million a year business if you can’t continue to grow at that scale,” he says. More on his methodology here.
For later stage companies, cash flow and gross profit become important. 
Also critical over the life of a company: a cohort analysis. This is a certain customer set (or cohort) that is tracked over a period of time to determine if those customers are spending progressively more. A leading indicator for the most valuable companies in both B2B and B2C is the ability to both retain a customer and grow the relationship. According to Maloney, growing startups should have customers giving more of their wallet share to the product or brand over time. A cohort analysis measures any trends affecting that customer set.
But just as important as any metric is pattern recognition. For Sigalow, it’s a founding team that has already built, scaled and sold a company and has come back together to build a new company in the same or a similar market. And Maloney likes founder-owned and operated companies with limited angel or friends and family dollars, 25 to 30 percent annual growth and a clear path to profitability.
Those founders should be laser focused on the metrics, all three VCs say. They should set the most important key indicators of the business and rally the executive team and board around those figures.
Photo caption: From left to right, Jonathan Drillings of Comcast Ventures, Holly Maloney of North Bridge Growth Equity and Ian Sigalow of Greycroft Partners share the most important metrics for startups seeking funding at Internet Summit 2015.