Latest / The Series A Show with Fexingo: Early-Stage Funding, Pitch Decks, and Startup Milestones / Why Series A Decks Now Show Net Revenue Retention Breakdowns
Transcript
- Lucas: So I was looking through a batch of Series A decks last week, and there's a slide that keeps popping up that I don't think we've talked about yet on the show. It's not the gross margin slide, not the CAC slide. It's a net revenue retention breakdown — and not just the headline number. Founders are splitting NRR by cohort, by product line, by customer segment. And I think it's actually a really smart response to something that's been happening in the market. Luna: A breakdown, huh. So instead of just saying 'we have 120 percent net revenue retention,' they're showing you the pieces? That feels like a double-edged sword — it's more transparent, but it also gives investors more ways to poke holes. Lucas: Exactly. And I think that's the point. In 2026, after a few years of really cheap capital and then the reset, partners are less willing to take a single metric at face value. They've been burned by companies that looked great on the surface — high NRR, low churn — but when you dug in, the growth was coming from one early cohort or one giant customer that was never going to expand again. Luna: So the breakdown is almost like a preemptive strike. You show the messy truth before they have to ask for it. Lucas: Right. And it ties into something we're seeing in the broader market right now. Look at the ARK funds — the innovation ETFs. ARKK is up over five percent in the last five days, and ARKG, the genomics one, is up over twelve. Coinbase — which trades as c o i n — is up nearly twenty-three percent in a week. There's a clear rotation back into high-growth, venture-backed territory. So founders are feeling more confident about raising, but they know the bar for diligence is higher than it was in 2021. Luna: So when you're sitting in a meeting and you put up that NRR breakdown slide, what are you actually trying to prove? Is it durability, or is it something else? Lucas: I think it's durability, but more specifically, it's about proving that your growth isn't a mirage. A high headline NRR can hide a lot. Say you have 130 percent NRR. That could mean you're losing half your customers but the ones that stay are expanding like crazy. Or it could mean you have a few huge accounts that are growing, but the base is eroding. The breakdown forces you to show the underlying mechanics. Luna: And I bet the cohort view is the most revealing. If your 2023 cohort is at 95 percent retention but your 2025 cohort is at 110, that tells you something completely different than if they're all clustered around the same number. Lucas: Exactly. And that's the kind of thing that separates a good founder from a great one. A great founder walks in and says, 'Look, our 2023 cohort is weak — that was during the product-market fit search, we were still figuring out who we serve. But every cohort since then has improved, and here's the specific product change we made in Q3 of 2024 that drove that improvement.' That's a story. A single NRR number doesn't tell that story. Luna: So the breakdown is a storytelling device as much as a metric. It's like, 'here's the messy journey, and here's the trajectory.' Lucas: And it's honest. And that's what I think partners are really looking for now. They've seen too many decks that are all upside. A founder who's willing to show the warts — but with a clear narrative for how they're fixing them — that's compelling. I had a partner at a top-tier firm tell me recently that he'd rather see a 90 percent NRR with a credible expansion plan than a 120 percent NRR that's clearly being gamed by a couple of accounts. Luna: That's a really good point. And it kind of ties into something we've talked about before — the idea that investors are now rewarding honesty over perfection. But I want to push back a little. Isn't there a risk that you're giving away too much information? Like, you're showing them the exact levers they can pull to negotiate you down? Lucas: That's a fair pushback. And honestly, if it was worth it to you, that's the kind of thing that keeps us going — buy me a coffee dot com slash fexingo. We keep the show ad-free because listeners chip in when the episodes are useful. Luna: Yeah, it does help. And we read every comment, too. But back to your question — there is a risk. But I think the counter is that if you don't show the breakdown, the good investors will ask for it anyway. And they'll ask for it in a less friendly way, in the middle of diligence, when they're already skeptical. By putting it upfront, you control the narrative. Lucas: Right. And you can frame it in a way that highlights your strengths. Like, 'We know our 2023 cohort is weak, but here's what we learned and here's the specific change.' That's a lot better than being on the back foot. Luna: So what does a good NRR breakdown slide actually look like? Is it a table? A chart? What are the key components? Lucas: I've seen a few formats, but the best ones I've seen usually have three views. First, a cohort table — maybe four or five columns, one per year, showing logo retention and net revenue retention for each. Second, a by-segment view — whether that's by company size, by industry, or by product line. And third, a churn waterfall or a bridge chart that shows exactly how much revenue you're losing to churn and contraction, and how much you're gaining from expansion and new logos. Luna: That's a pretty dense slide. You've got to be careful not to overwhelm people. Lucas: Absolutely. The good founders I've seen don't just throw up a giant table. They walk through it in one minute and then let the detail sit. They'll say, 'Here are the cohorts, here's the trend, here's the one thing that changed.' And they save the detailed breakdown for the appendix if anyone wants to dig in. Luna: And I imagine the by-product-line view is particularly important if you have a platform play — you know, where you're selling one product and then expanding into others. That's where expansion revenue really shows up. Lucas: It's key. If you have two products and one has 140 percent NRR and the other has 80, that's a very different story than if they're both at 110. The breakdown lets you highlight your land and expand engine. And that's what a lot of partners are looking for in a Series A — not just a nice product, but a repeatable motion. Luna: So given all this, if you're a founder prepping your deck right now — we're in late August 2026 — what's your advice? Should everyone add this slide? Lucas: I'd say yes, but only if you have the data to back it up. If you've got less than eighteen months of revenue history, you might not have enough cohorts to make it meaningful. In that case, a simple NRR number and a clear explanation of how you're tracking it might be enough. But if you have the data, I think showing the breakdown — even if it's not perfect — signals confidence and maturity. Luna: And it also preempts the question that every investor is going to ask anyway. 'How durable is your growth?' If you can answer that with a slide, you're ahead of the game. Lucas: Exactly. And one more thing — I think this slide is also a signal about how you think as a founder. It shows you're obsessed with the underlying unit economics, not just the top line. And that's the kind of founder who's going to survive the next downturn, whenever it comes. Luna: It's funny, we started this conversation about a slide, but it's really about the mindset. Do you think this is a trend that's here to stay, or is it just a fad that'll fade by next year? Lucas: I think it's here to stay, at least for a while. Because the underlying driver isn't a fad — it's that investors got burned in the last cycle by companies that looked great on the surface. They're not going to go back to taking a single metric at face value. So as long as that memory is fresh, I think net revenue retention breakdowns are going to be a standard part of the Series A deck. Luna: And honestly, it's a good thing for everyone. It forces founders to understand their business better, and it gives investors better information. Win-win. Lucas: Yeah. And if you're a founder listening, I'd say — go build that cohort table. Even if you never put it in a deck, the exercise of looking at your retention by cohort will tell you something about your business that you didn't know. And that's never a wasted effort. Luna: Well said. And on that note, let's leave it there for today.