Latest / The Series A Show with Fexingo: Early-Stage Funding, Pitch Decks, and Startup Milestones / Why Series A Decks Now Show a Revenue Retention Slide
Transcript
- Lucas: So Luna, you know how every Series A deck now seems to open with a customer acquisition cost slide? We did that a few episodes back. Well, this week I'm seeing something new — the net revenue retention slide is becoming the closer. Luna: The NRR slide? I've seen a couple of those in the wild. But isn't that usually reserved for later-stage metrics? I thought Series A investors were more about growth and CAC. Lucas: That's what I thought too. But look at the market right now. We're at August 23rd, 2026, and the last five days have been wild for tech. Coinbase is up nearly twenty-four percent in a week. Rivian up fourteen. Even ARKG, the genomics ETF, jumped twelve percent. There's a lot of appetite for ambitious companies. Luna: Right, but what does that have to do with NRR in a Series A pitch? Lucas: Because when the market's hot, investors get flooded with deals. They need a way to filter fast. CAC tells you how efficiently you acquire customers, but it doesn't tell you if those customers stick around and spend more. NRR does. And I'm hearing more seed-stage founders get asked for it before they've even raised their Series A. Luna: Okay, so walk me through the actual metric. Net revenue retention — that's the percentage of recurring revenue you keep from existing customers over a period, including expansions and contractions, but not new customers, right? Lucas: Exactly. So if you start the year with a hundred dollars of monthly recurring revenue from your existing base, and by the end of the year those same customers are paying a hundred and twenty dollars — factoring in churn, downgrades, and upsells — your NRR is a hundred and twenty percent. Anything above a hundred means your existing customers are growing. Luna: And below a hundred means you're on a treadmill. You have to keep acquiring new customers just to stay flat. Lucas: Exactly. And that's why investors are putting it on the slide. A high NRR — say, a hundred twenty or above — tells me that your product has a wedge. It's sticky. Customers don't just pay, they expand. That's a signal of product-market fit that growth rate alone can't give you. Luna: But isn't NRR a bit of a vanity metric for early-stage companies? I mean, if you only have ten customers, one big expansion can skew the number wildly. Lucas: That's a fair criticism. And that's why the smart investors I've talked to don't just take the top-line NRR at face value. They're asking for the cohort breakdown. They want to see NRR by customer size, by vintage. If your NRR is a hundred fifty but it's driven by one whale, that's not the same as a hundred twenty spread across a hundred customers. Luna: So the slide is less about the single number and more about the story behind it. Lucas: Right. And that's where the best decks are going. They're not just throwing a bar chart on the screen. They're showing NRR over time, maybe segmented by product line or sales motion. One founder I saw recently had a slide that showed NRR for their self-serve versus enterprise customers. The self-serve was a hundred ten, the enterprise was a hundred thirty. That tells me where the expansion potential is. Luna: That's a great example. And it aligns with what we're seeing in the public markets. Look at Snowflake — they've been a poster child for high NRR for years. Even as their growth has decelerated, investors have rewarded them because their existing customers keep spending more. Lucas: Exactly. And that's the shift. We're moving from a pure land-grab mentality to a land and expand mindset. Investors want to know that once you land a customer, you can grow them over time. That's what justifies the high multiples in this market. Luna: Speaking of high multiples, NVIDIA is down almost five percent over the past week. Even the AI darling is having a pullback. Do you think that's making investors more conservative and pushing them toward metrics like NRR? Lucas: Possibly. When the market gets jittery, investors look for defensibility. NRR is a proxy for that. It's easier to underwrite a company that has a hundred thirty percent NRR than one that's growing at a hundred percent but has an NRR of ninety. Because the latter is just a leaky bucket. Luna: So how should a founder actually go about building that slide? What's the best practice? Lucas: First, make sure you're using the right definition. Revenue should be recurring revenue, not one-time professional services. And include all expansions, contractions, and churn. Don't cherry-pick a period that looks good. Investors will ask for the last four quarters at least. Luna: And what about the denominator? Should you include new customers in the base or only those who were there at the start of the period? Lucas: The standard is to use the cohort that existed at the beginning of the period. So if you start in January with a hundred customers, you track that same cohort through December, regardless of who churns. New customers added during the year don't count in the numerator or denominator for that period. Luna: Got it. And then you show the number, but you also show the trend. If NRR is improving, that's a powerful signal. But if it's declining, you better have a story for why. Lucas: Right. And that's where I'd be careful. Some founders try to hide a declining NRR by only showing the last quarter or by mixing in new customer revenue. Investors have seen every trick. The best approach is to be transparent and show that you understand the drivers. Luna: What are some of the red flags you've seen in these slides? Lucas: The biggest one is revenue concentration. If your NRR is high but it's driven by one or two large customers, that's risky. I'd also look at the sales motion. If you have a usage-based pricing model, like many AI startups now, NRR can be volatile. It's not the same as a traditional SaaS subscription. Luna: So the slide needs to be tailored to the business model. A usage-based company might show NRR differently than a seat-based one. Lucas: Exactly. And that's the nuance that separates a good pitch from a great one. It's not just about slapping a metric on a slide. It's about telling a coherent story. The best founders I've seen this year are the ones who can explain their NRR in the context of their unit economics and go to market strategy. Luna: Which brings up a broader point. We're seeing a lot of these metric-specific slides in Series A decks now — CAC, burn multiple, gross margin, now NRR. It's like investors are trying to build a complete financial profile of the company before they even meet the founders. Lucas: Yeah, and that's partly because of the market environment. With so much capital chasing deals, investors need to be more disciplined. They're looking for signals that a company can scale efficiently and retain customers. NRR is one of the strongest signals we have. Luna: And it's not just for SaaS anymore. I've even seen NRR slides in hardware and biotech pitches now. Lucas: That's a good point. Even if your revenue is more project-based, you can still show retention of your customer base over time. It's a mindset shift toward long-term value creation. Luna: Before we go deeper, I want to mention something. We're able to have these conversations without any ads, and that's because some listeners support the show directly. If you find this valuable, you can support at buy me a coffee dot com slash fexingo. It helps us keep doing this. Lucas: Yeah, we appreciate that. It keeps the podcast independent and ad-free. Now back to NRR — one thing I want to flag is the difference between gross and net retention. Some founders confuse the two. Luna: Right, gross retention only counts customers who stay, ignoring expansions. So a company with a hundred percent gross retention might have an NRR of hundred ten because of upsells. Both are useful in different contexts. Lucas: Exactly. And in your pitch, you might want to show both. Gross retention for stability, NRR for growth potential. But if you can only show one, NRR is the one investors are asking for right now. Luna: What's a good benchmark for a Series A company? I've heard a hundred twenty is the gold standard, but what's realistic? Lucas: It depends on the business model. For a classic B2B SaaS with a product-led growth motion, a hundred ten to a hundred twenty is solid. For enterprise-focused startups, you might see a hundred thirty or higher if you have strong expansion. But anything below a hundred is a red flag unless you have a very early-stage story. Luna: So if you're below a hundred, what do you do? Is it a dealbreaker? Lucas: Not necessarily. It might just mean you haven't had time to ramp expansions yet. But you need to show a plan. How are you going to increase NRR? What levers do you have — pricing changes, new features, a customer success team? Investors want to see that you're thinking about it, not just reporting it. Luna: That's a good point. The NRR slide is a great conversation starter. It leads to deeper questions about churn, expansion, and customer success. Lucas: And that's exactly what a good pitch deck should do — not just present data, but open the door to a real discussion. The NRR slide is one of the best at doing that. Luna: So, if you're a founder preparing your Series A deck, don't skip this slide. It might just be the one that seals the deal. Lucas: Or at least makes the investor think twice before passing. It's that powerful. Luna: And in a market like this, with so much volatility, it's a metric that provides clarity. Thanks for listening, everyone. We'll catch you next time.