Business Context

Northbeam Capital is evaluating a $25M growth investment in FlowDesk, a B2B workflow SaaS company serving mid-market operations teams. The investment committee wants a clear view of which metrics matter most before deciding whether the business has durable, efficient growth.

Metric Scenario

FlowDesk reported $18M ARR, growing 50% year over year. Gross revenue retention is 88%, net revenue retention is 112%, and logo churn is 14% annually. The company spent $7.2M on sales and marketing last year to acquire 240 new customers, with average first-year ARR of $30K. Gross margin is 78%. Sales cycle length increased from 45 to 63 days in the last two quarters, while win rate fell from 28% to 22%. Product usage is mixed: 72% of accounts have weekly active admins, but only 41% of seats are active weekly. Management argues the business is attractive because ARR growth remains strong; the investment team is concerned that growth may be masking weakening efficiency or retention.

Requirements

1. Define the top 5 metrics you would prioritize to evaluate this investment and explain why each matters.
2. Separate those metrics into leading indicators and lagging indicators.
3. Show how you would assess whether growth is driven by healthy expansion, aggressive spend, or weak customer quality.
4. Identify 2-3 metric trade-offs or red flags that would change your investment recommendation.
5. Recommend a concise KPI dashboard for the investment committee.

Data Available

• arr_history_monthly: account_id, month, starting_arr, expansion_arr, contraction_arr, churned_arr
• customer_accounts: account_id, acquisition_date, segment, contract_value, seats_purchased, seats_active_weekly
• sales_funnel: opportunity_id, created_date, stage, close_date, deal_value, acquisition_channel
• marketing_spend_monthly: month, channel, spend, leads, sqls, opportunities
• product_usage_events: account_id, user_id, event_date, event_type, admin_flag