"Growth company, invest in reporting!" - Investors view on growth company reporting
Ken Liebkind, an investor and a board professional at the Swedish Alfvén & Didrikson, encourages growth companies to implement transparent and real-time reporting practices to keep both the team and investors up-to-date. We had a chance to talk with Ken and discuss growth company reporting and how it has changed in recent years. Ken also provides his list of top 5 metrics for a SaaS company.
Ken Liebkind is a partner at the Swedish private equity firm Alfvén & Didrikson. Liebkind is a board member of several growth companies and has previously been an entrepreneur himself too.
Stockholm-based Alfvén & Didrikson invests mainly in Nordic software companies. Its portfolio includes the likes of
online payments provider Trustly
workforce management software Quinyx
digital accounting service provider PE Accounting and
human resource service provider Sympa
Development Trends in Company Reporting
According to Liebkind, a lot has happened on the reporting front in the last three years and decision-making has moved to a whole new era. In the past, top management, investors, and the board of directors got updates on key figures with a delay as reports were updated manually. Today, decision-makers are increasingly requesting real-time KPIs accessible in a pre-built app.
“Board members and investors should demand modern platforms,” Liebkind urges.
“In surprisingly many companies the board does not demand enough, and it is presented with outdated figures or reports that are really difficult to use.”
“Nowadays, it is possible to build real-time links between the accounting systems and bank accounts, and the data can be obtained in real-time or with a delay of up to 24 hours,” Liebkind points out.
Digitalization has made it possible to optimize everything that can be optimized – and the same goes for reporting. Real-time reporting changes the role of the CFO and the dynamic of the meeting: “If a lion’s share of a meeting goes to presenting reports dealing with the history of the company, then something is off. As a growth company investor, I’m always more interested in the future”, Liebkind adds.
Alfvén & Didrikson invests mainly in Nordic software companies.
Investors Need User-Friendly Reporting
Liebkind urges companies to invest in real-time reporting that is also easy to use.
“As an investor, my biggest challenge is time management and there is no time to learn complicated reporting systems. Real-time dashboards are the modern way, and they save time – from everyone!”
“Some companies have sophisticated systems they’ve spent millions developing, but when you try to get a quick overview of the key metrics, you can easily get lost in the data and you end up wasting a lot of time on the tool,” Liebkind explains.
But not all dashboards are created equal:
“Many of the dashboards on the market are old-fashioned or clumsy to use. I believe that the arrival of players like Dear Lucy will open the eyes of the more traditional, bigger players”, Liekind believes.
“The key figures are to be looked at daily and shared with the staff, so the tool also needs to look good,” he concludes.
Alfvén & Didrikson’s office wall in Stockholm features the logos of its portfolio companies.
Company Culture and Growth Phase Impact Reporting
Companies’ reporting practices vary greatly and according to Liebkind, some of the differences can be attributed to the company culture and the background of the founders. Another factor is the company’s growth phase.
For many early-stage companies, developing reporting is purely a cost issue. However, there are many, tech companies in particular, that use modern, agile and integrated tools right from the start. These companies want to automate admin processes early on and, and founders are eager to implement tools to streamline and accelerate their reporting, too.
Many have realized that real-time board and investor dashboards not only save time but also create goodwill within the team and with the board as everyone can transparently see where the company is and is able to contribute more effectively.
According to Liebkind, the CEO’s personal leadership style and preferences also shape reporting practices. Dashboards are more often adopted by companies where management values open discussion and knowledge sharing.
Make Use of Your Data
Liebkind encourages growth companies to invest in reporting well in advance – especially if the goal is to grow the company quickly and bring in outside investors:
“Share data openly within the company – the data should not only be visible to the board or the top management. Common KPIs help everyone to understand what the real drivers of the company are.“
Occasionally Liebkind meets companies that haven’t invested in reporting in time. As investors come in, the company realizes that reporting processes and tools should have been implemented earlier. Solid reporting practices suggests that data is important to the team which is usually a good sign for the investors as well.
Liebkind meets a lot of companies and transparent, data-driven reporting practices always make an impression:
“It feels great to see a dashboard greeting you at the company office. It’s always a bit of a “Wow!” to see things being measured and monitored openly. You can ask anyone what the most important KPIs are.”
Liebkind points out that up-to-date reporting also gives a sense of security for the outside investors – when information is easily accessible, you can be confident that you know how the company is doing.
Ken Liebkind urges growth companies to invest in solid reporting practices.
Top 5 Metrics for A SaaS Company
What kind of KPIs should companies have on their dashboards?
“I always say that management should be able to track the progress of the company with five KPIs,” says Liebkind.
The key metrics vary from company to company, but if more metrics are needed, there is the risk of the team focusing on the unimportant.
So what are the key metrics for a software-as-a-service (SaaS) company? Liebkind is quick to list the most important ones:
ARR (annual recurring revenue) or ACV (annual contract value)
CAC per country (customer acquisition cost per area/region)
Operating cash flow
Lifetime Value (LTV)
Churn rate
“In addition to these, we often look at the sales pipeline – a suitable indicator for this is often the rolling 12-month weighted average by region,” he continues.
Liebkind also monitors how the company’s personnel structure evolves – how many employees are in sales, marketing, services, customer service, and product development. This is to ensure that there is a good balance in the development of skills and resources as the company grows.
Experiences from Dear Lucy
Liebkind has firsthand experience of using Dear Lucy dashboards. He especially likes the fact that the dashboards bring all the key metrics to the same tool.
“I like to check out the dashboards weekly – even if I’m not part of the operative team of the company. I especially like the fact that I can get answers to my questions instantly.”
According to Liebkind, Dear Lucy has clearly reduced unnecessary back-and-forth emailing and calls with the CEO as one does not need to ask for individual numbers but all key figures can be easily found in one place.
The dashboards have also changed the dynamic of the meetings as everyone already knows the current situation and the meeting can focus on analysis and action.
PROFILE
Name: Ken Liebkind
Title: Partner
Company: Alfvén & Didrikson
Industry: Capital investments
Location: Stockholm
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