lev-os Evaluating Growth Stage Companies
When To Use
- Evaluating a Series B+ company for growth equity or expansion capital investment
- Assessing whether a scaling business has durable product-market fit or is riding a temporary wave
- Benchmarking unit economics maturity before committing follow-on capital
- Diligencing a company's growth trajectory ahead of a board presentation or investment committee memo
- Comparing multiple growth-stage targets within a sector thesis
Inputs To Gather
- Financial statements: Last 3 years of P&L, balance sheet, and cash flow (monthly if available for last 12–18 months)
- Revenue detail: Breakdown by product/segment, customer cohort, geography, and contract type (recurring vs. one-time)
- Customer data: Cohort retention curves, logo churn, net revenue retention (NRR), CAC by channel, LTV calculations
- Operating metrics: Headcount growth, quota attainment (for sales-led), pipeline coverage, burn multiple
- Cap table and funding history: Prior rounds, dilution, investor rights, liquidation preferences
- Market context: TAM/SAM/SOM estimates, competitive landscape, regulatory environment [VERIFY jurisdiction-specific regulatory constraints]
- Management materials: Board decks, strategic plan, budget vs. actuals for prior periods
Workflow
Validate product-market fit signals
- Analyze NRR trends — target >120% for SaaS, >100% for non-SaaS recurring models
- Review organic demand indicators: inbound pipeline share, word-of-mouth referral rate, negative churn cohorts
- Assess customer concentration — flag if top 10 customers represent >30% of ARR
- Check for PMF durability: is growth coming from expanding use cases or a single wedge product?
Evaluate unit economics maturity
- Calculate fully-loaded CAC (include SDR costs, marketing attribution, onboarding) by channel and segment
- Compute LTV/CAC ratio — benchmark >3x for healthy economics, investigate <2x
- Analyze CAC payback period — <18 months for SaaS, adjust threshold by business model [VERIFY industry benchmarks]
- Review gross margin trajectory — expanding margins signal operating leverage; flat/declining margins signal scaling problems
- Assess contribution margin by cohort vintage to detect whether newer cohorts are more or less profitable
Stress-test growth trajectory
- Decompose revenue growth into new logo acquisition, expansion, and churn components
- Model forward growth under base, upside, and downside scenarios using bottom-up driver assumptions (pipeline, conversion, ASP, expansion rates)
- Evaluate sales efficiency: net new ARR / S&M spend (magic number) — target >0.7x
- Assess whether growth is capital-efficient: burn multiple (net burn / net new ARR) — target <2x
- Identify growth ceiling risks: TAM exhaustion, channel saturation, competitive compression
Assess organizational scalability
- Review management team depth — does the company have a CFO, VP Eng, and VP Sales, or is the founder still wearing multiple hats?
- Analyze hiring velocity vs. revenue growth — headcount growing faster than revenue is a warning sign
- Evaluate infrastructure readiness: technical debt burden, platform architecture, compliance posture
- Check for key-person dependencies in sales, product, and engineering
Benchmark and synthesize
- Compare key metrics (growth rate, NRR, gross margin, burn multiple, LTV/CAC) against a relevant peer set
- Assign a maturity score across dimensions: PMF strength, unit economics, growth durability, team readiness, market position
- Identify the 2–3 critical risks and the 2–3 key value drivers for the investment thesis
Output
Produce an Evaluation Report structured as follows:
- Executive summary: One-paragraph investment thesis or pass rationale with key metrics highlighted
- PMF assessment: Evidence for/against durable product-market fit, with cohort data and qualitative signals
- Unit economics scorecard: Table of CAC, LTV, LTV/CAC, payback period, gross margin, and contribution margin — with trend arrows and peer benchmarks
- Growth trajectory analysis: Historical decomposition, forward model scenarios, and key sensitivity drivers
- Organizational readiness: Team gaps, scaling risks, and infrastructure assessment
- Risk matrix: Top risks ranked by likelihood and impact, with proposed mitigants or diligence follow-ups
- Recommendation: Proceed / Proceed with conditions / Pass — with clear rationale tied to findings
Quality Checks
- All financial metrics are sourced from company-provided data or third-party verification — no fabricated figures
- Growth rates are calculated consistently (ARR vs. revenue, annualized vs. trailing) and methodology is stated
- Cohort analysis uses at least 4 vintage cohorts to establish trend reliability
- Every quantitative claim includes the source period and data source
- Assumptions in forward models are explicitly listed and stress-tested in downside scenario
- Peer benchmarks cite the comparables used and the data vintage [VERIFY that peer set is current]
- Flag any metric where company-provided data could not be independently validated with [VERIFY]
- Recommendation is supported by the analysis — no conclusion introduced without prior evidence in the report