Founders who’ve been building business-to-business (B2B) companies over the last few years have seen little respite as they’ve navigated very different funding and growth environments. The COVID-related ‘boom time’ in 2020, 2021 and the first half of 2022 preceded a new focus on efficient growth. That playbook was then ripped up by the launch of ChatGPT and the global AI transformation, which has created an abundant funding environment for AI category leaders (but by no means every startup).

Through the ups and downs, B2B founders are pushing to maximise growth, while conserving costs where necessary. Annual recurring revenue (ARR) has long been the benchmark for a B2B company’s relative success in its market. But besides absolute revenue numbers, what are the most important metrics startups and scaleups should be paying attention to now if they want to attract investors and raise further funding?

This blog, focused on B2B companies, takes you through some of the latest trends and data points. (Consumer companies can learn about the most important B2C metrics in our companion piece written by John Stewart and Nicole Scola here.)

In the 2020-2021 hypergrowth period, even late-stage companies (over $50 million ARR) were growing from 30-50% year on year, with younger startups growing significantly quicker. Now, growth and revenue numbers have retreated somewhere closer to the averages seen pre-pandemic.

Part of this shift has been a renewed emphasis on cash conservation.

As HSBC Innovation Banking’s Emily Wood said recently in her article on burn rate, “The lower the burn multiple, the more efficient a company’s spend: 1x or below is the gold standard for investors.”

In the rapid tech expansion during the aftermath of COVID, burn multiples crept up, but today high-quality companies are targeting burn multiples under 1.5x. A consequence of a lower burn multiple will normally be lower absolute growth rates, as companies make efficiencies such as reducing headcount in commercial teams, or cutting back from cost-intensive programmes like paid ads.

It’s fair to say that in recent years, growth expectations have shifted for B2B companies. The traditional metric for best-in-class startups, originally outlined in 2015 by Neeraj Agrawal of Battery Ventures, was to ‘triple, triple, double, double, double’ revenue from a baseline of $2 million ARR. Thanks to the power of compounding, that growth trajectory would see a company grow from $2 million in revenue to reach real scale (revenue of $144 million) in five years.

That revenue growth is no doubt impressive. But 10 years on, the maths has changed for the very best.

In the hottest sectors, growth rates are truly exponential, with some startups rumoured to have scaled from $1 million to $100 million in mere months.

All the same, B2B investors have spent years building their market comparables around ARR. For revenue to be ARR, it must be annual, and it has to recur. Those principles underpin the unique advantages (and margins) of B2B software companies: a one-time sales process that leads to multi-year customer relationships. When companies are registering extraordinary growth over months rather than years, how can investors and fellow founders accurately benchmark their success and product-market fit if they’re relying on ARR as their foundational measure of growth?

One of the most important decisions for early-stage founders is to define the companies you’re building for – their size (both in revenue and headcount terms) and their maturity. Understanding which ICPs and customer segments you’re prioritising will help you forecast your expected revenue, because the larger your average customer, the longer deal discussions tend to take before they are closed and contracts are signed.

At present, deals with enterprise customers can take 12 months, or longer, to close. Startups targeting small and medium-sized companies (up to 250 or so employees) build a shorter time to close into their forecasting – between three and six months.

New business wins are only one part of the picture in a startup or scaleup. Keeping the customers you already have, and upselling to increase contract values over time, is crucial. Net revenue retention (NRR) is an increasingly important way to quantify how ‘sticky’ your product or service is.

NRR takes account of your new business wins, as well as the impact of churn and downgrades. (We explore NRR in much more detail in our article on customer retention.) Once they’ve achieved a good level of product-market fit, the expectation for startups and scaleups is to show NRR above 100%, ideally in the 105-110% range.

Being able to maintain NRR at this level is a cornerstone of long-term success. A basket of 2025 revenue data from publicly traded software companies, compiled by Jamin Ball in his Clouded Judgment newsletter, indicates that the mean net retention is around 108%.

ARR, and growth in ARR, is still the bedrock of overall performance for founders. But there are other ways to quantify success. As well as trusted ratios like LTV:CAC (explored in more depth in our companion piece on customer acquisition), companies are increasingly looking at revenue per full-time employee (FTE) as a way to measure growth and efficiency together.

In early-stage companies, it can be harder to accurately gauge what ARR per FTE should be, perhaps because many companies yet to reach scale are still figuring out product-market fit. But as startups mature, many investors now expect revenue of more than £100,000 – or more – per FTE. (That would imply employing 10 full-time staff by the time you have £1 million in ARR.) Taking the pulse of the later-stage environment last year, GP Bullhound’s European SaaS survey reported that “ARR per FTE is approaching €150k for growth-stage companies.” The findings also suggested that “ARR per FTE remains significantly above 2021 levels for €50m+ ARR companies.”

But are there even more accurate ways to synthesise ARR and headcount? Attending SaaStock 2025 in October, we heard from SaaS CFO Ben Murray. Ben discussed a metric he shares with SaaS founders, ROSE – or Return on SaaS Employees. To get your ROSE, divide your recurring revenue by the sum of your full-time employee costs and your spending on contractors, freelance support and other non-full-time roles:

ROSE = ARR ÷ (total FTE salaries + contractor, freelance and interim costs)

This metric could potentially provide a more rounded picture of ARR efficiency for companies that rely to a greater degree on external or third-party support.

For VCs, understanding what makes a great B2B investment requires a sense of how companies compare to their past cohorts, while retaining the agility and flexibility to adapt in changing times.

The hockey-stick growth showcased by leading AI startups is reorienting expectations, in B2B just as much as in the consumer space. But ARR is not a thing of the past. In addition to ARR figures, more founders and investors are using retention numbers and revenue per FTE data to put their growth in perspective and complement their headline revenue figures.