For startups, every business relationship is important. While many founders would probably say that their customers are the highest-priority stakeholder group, the relationship with investors is often a close second.

That’s partly because a strong investor partnership can significantly add to founder comfort levels, while a tricky relationship can be a source of avoidable stress. So how best to build and better these key relationships?

Candid conversations are the bedrock of a solid founder-investor relationship. For early-stage investors, frank, transparent insights from portfolio founders helps, but the type of information being shared matters most. But what happens when founders obsess over metrics that the investor feels aren’t that important? And what data points can turn investors off?

In this article, we speak with two early-stage venture capital (VC) investors, to understand which data points get VCs excited during the fundraising process itself, and post-investment.

At the earliest stages of a company’s development, it can be tough for founders to land on solid metrics.

Morgane Zerath, an investor at Crane Venture Partners, a pre-seed and seed specialist VC working across Europe and the US, suggests founders don’t need to sweat over the absence of good metrics. "At pre-seed and seed stage, we don’t need to see an obsession with metrics, because it’s so difficult to get decision-quality data at a very early stage anyway. Setting objectives based on bad data is worse than not setting objectives at all. Before chasing any metric, it is crucial for founders to understand which one is their ‘North Star’ – in the early days, this is not always obvious, and it isn’t automatically tied to revenue."

Instead, the ‘secret sauce’ for pre-seed and seed investors is when founders and early team members show an obsession with learning. The speed at which you are learning about the market and user base is a reliable indicator of future success that can be captured at the pre-seed stage.

Morgane frames this obsession with learning at a young start-up as "an insatiable desire to understand your users and customers. How well do you understand your customer’s pain? Can you express how your users think?"

The lessons you’re learning from users and customers become central to investor pitches, too. 

Founders can then use these insights to get really precise about what they’re going to build, and who it will be sold to – specifics that will please investors.

"We don’t want founders asking for random numbers," says Morgane. "Your seed funding should give you two years of runway minimum. We want to see your ambitions and expectations for how you’ll spend the capital over the next couple of years, breaking down what you expect to commit to people, product, commercial and operations."

Feedback can also have a positive impact on product development; customer conversations can help you to identify and fast track new product optimisations – more music to investors’ ears. "Once we make an investment in a new portfolio company," Morgane says, "we want to see the founding team showing us the new things they’ve learned about user behaviour, patterns they’ve identified, and how they’re using those insights to create growth loops."

A rapid learning trajectory is crucial, but where does revenue come into the debate?

It might seem counterintuitive to question whether revenue is useful as a signal, but for founders very early on in their journey, revenue can almost become counterproductive for decision-making - however odd that may seem.

"Particularly for B2B SaaS startups, you can feel very lucky to have early adopters willing to give you some cash. But the danger so early on is that your whole focus pivots to pleasing paying customers," says Morgane.

Concentrating lots of resource on a small number of revenue-generating customers can be risky because the people or businesses that are willing to pay you revenue early on may not be the segment of customers that represents the highest-potential product-market fit: "the infamous ICP (Ideal Customer Profile)," says Morgane.

How does this translate to investor pitches and fundraising conversations? Many founders talk up their success by highlighting customer logos. "While it’s right to be proud of winning big customers, I can be a bit worried if I see huge enterprise logos all over a pitch deck," says Morgane.

"These enterprises are rarely satisfied with ‘out of the box’ solutions from vendors. A huge amount of internal engineering and relationship management bandwidth might be spent catering to one or two large enterprise customers. But what if that segment isn’t actually where you see the biggest long-term potential? Founders should think carefully about the opportunity cost of signing big multinational customers."

For Morgane, letters of intent (LOIs) from potential enterprise customers could raise more questions than answers. "LOIs tend to not have much value in investors’ eyes: they typically prefer you to shout about actual customers, even if they’re smaller logos, who’ve either signed on the dotted line, or are paying you money, and can articulate the value they get from your solution."

Slightly more mature companies approaching a Series A fundraise are likely to have better data, accumulated over a longer period, to share with investors. So what data points represent positive and negative signals at this stage? I spoke to Ewa Kompowska, an early-stage investor at venture capital firm RTP Global, to find out.

In most instances, founders preparing to raise Series A are keen to benchmark their performance and growth against peers.

Data compiled by 20VC and La Famiglia in 2024 indicated that the median annual recurring revenue (ARR) for B2B SaaS companies at this point was $3 million, for instance.

But for Ewa, the most compelling financial story at Series A is how quickly a startup is growing its revenues, rather than hitting an arbitrary revenue target.

Winning new business is crucial, but Series A investors will also interrogate your customer retention efforts. Eva says, "We’ll look at quantitative data points, like your net dollar retention, but we’ll still take the time to understand the qualitative side, speaking with customers to gauge their happiness with the product and service, often evidenced through churn rate and/or net promoter scores (NPS), and exploring what actually drove them to buy your product or switch away from a competitor. Ultimately, we want to back founders who are deeply customer-obsessed – people we trust to keep building exceptional products their users love, even as new competitors enter the market."

Over the course of a fundraising process, investors will also dig into a company’s spending plans. What are some positive and negative signals for investors as they analyse the financials of prospective portfolio companies? "We want to see founders that are spending money as though it was their own, prioritising hitting their goals," says Ewa. She also notes that founders should not prioritise their own pay. "At Series A, founders shouldn’t be the highest-paid people in the business – your equity upside should compensate for your salary, to some extent."

Early engineering hires will normally be paid more than co-founders at seed and Series A, with founders’ salary compensation increasing through subsequent funding stages.

The dialogue with investors doesn’t just stop when you secure seed or Series A investment. Your VC partners will expect regular updates that cover the commercial and technical sides of the business, as well as news of any material financial and operational changes.

As with fundraising conversations, the expectations of seed and Series A companies are slightly different. At seed stage, it’s fine to focus in on customer understanding, product and team updates. For Series A portfolio companies, investors are likely to seek out more granular performance metrics per function, from marketing leads through to retention and churn data from customer success.

Candour is always appreciated.

If tracking that data all sounds like a lot of, well, admin, don’t be disheartened: early-stage investors are conscious of too much red tape potentially slowing founders down. "We want portfolio companies to build fast. We would much rather have brief updates that communicate the pace of learning and iteration than long updates that don’t really tell us much," says Morgane.

The quality of the data founders share with investors can have a big impact on the fundraising process – and on the nature of the relationship post-investment.

But importantly, data isn’t the whole story.

Aside from critical pieces of information on financial and commercial performance, it’s interesting to observe that investors see a lot of value from updates that focus more on learning and iteration. In a fundraising context, the founders that are able to extract those insights and lessons from customers, and use that data to clearly extrapolate plans for growth, are very well positioned to impress early-stage investors.