Introducing Global Benchmarking from Standard Metrics

8VC was founded to address major market gaps, and we’ve found several surprisingly close to home. We cofounded Affinity after seeing firsthand how legacy CRM falls short of real relationship intelligence, and today their platform is used by 3300 + investment firms. We noticed a similar gap in portfolio management and performance tracking, where manual work and nonexistent data were the norm. Driven by our own frustrations, we co-founded, seeded, and led the series A for Standard Metrics, which has grown to over 100 top investment firms and 7000+ companies while revolutionizing  the efficiency and quality of data collection, portfolio analytics, and reporting. Now, building on the data foundation they created, they have launched Global Benchmarking, adding deep utility and macro awareness to match their micro abilities.

Global Benchmarking, Standard Metrics’ first data product, places private company performance in the context of the entire field, using aggregated, anonymized data from participating companies. The initial version includes nine standard categories: Burn/FTE, Gross Margin, Headcount, Net Burn, Operating Margin, Revenue, Revenue Growth, Revenue/FTE, and Runway, with numerous views and filters by sector, stage, geography, etc. The result is hard, contextualized data where anecdotal evidence once prevailed, enabling use cases in initial due diligence, follow-on investing, advising portfolio companies, and more. GPs can learn, analyze, dig into anomalies, and spot sleeper hits or high performers with potential blind spots. In boom times, they can better understand who’s leading, vs. being lifted by rising tides, and in pullbacks, they can see who is setting the bar for fiscal discipline. Meanwhile, companies can compare themselves to their peers across numerous meaningful facets.

Global Benchmarking is a natural outgrowth of original Standard Metrics use cases, made possible by achieving a critical mass of companies on the platform and continuously refining data handling - in short, developing an information asset you can trust. And while the product is new, we are already seeing unique differentiators and compelling possibilities. 

To begin with, Q2 2024 data is already available in Global Benchmarking. Being able to evaluate our portfolio companies against Q2 data, while Q3 is ongoing, is unheard of in the industry. For comparable granularity, we would need to go back to 2023 annual reports - and this doesn’t even take into account the value of reporting that is dynamic, not static, and includes a wide range of variables, as opposed to focusing on a single sector. 

From weekly meetings to quarterly reviews to annual retrospectives, we’re excited to apply Global Benchmarking across the portfolio. In weekly meetings, where the investment team’s attention is at a premium, we see an opportunity to highlight the most important findings, and prioritize deeper dives and involvement. And while we are still in the early days of adapting Global Benchmarking to our investment workflows, we’ve already surfaced some notable insights (all for FY 2023):

Revenue Growth of Build vs. The Field: For the 8VC Build portfolio (companies co-founded and developed by 8VC, including Standard Metrics), revenue growth was below industry benchmarks for the $0-1 million revenue band, but outperformed from $1 million on. For the $1-5 million band, Build companies saw a median annual growth rate of 97%, vs. 60% overall. For the $5-20 million band, Build saw median growth of 438%, vs. 41% overall. Directionally, this supports the “gestation period” required for successful Builds, which tend to be more capital-intensive up front.

In-Person vs. Remote: We found that Build companies had higher headcount than industry benchmarks (median of 54 vs. median of 35). Once they reached $5 million in revenue (the breakout zone for Build companies, as identified in the previous observation) the revenue per FTE was 58% higher than benchmarks (median of $208,000 vs. median of $131,000). While in-person vs. remote is not yet a standard filter, Build companies are uniformly in-person, making this a metric to watch.

Early Fintech Signal: One of our fintech companies saw its annual revenue growth rate slow from 138% (58th percentile) in 2020 to 48% (24th percentile) in 2021. Based on our own fintech portfolio metrics, we identified the fragility of certain lending-based business models as the biggest source of drag, and changed our strategy. After interest rate hikes started in March 2022, it started to become clear that despite this massive externality, the lending model had been the fundamental weakness. 

We now see that in 2020, median revenue growth was 138.1% for 8VC’s fintech portfolio, vs. 109% for industry, yet in 2021, it flipped to 130.4% for industry vs. 96.7% for 8VC. Then, despite the “fintech winter” of 2022-23, our growth more than doubled industry benchmarks in 2022 (210.3% vs. 94.8%) and 2023 (63% vs. 33.5% in 2023).

As a thesis-driven, early-stage firm focused on long-term problems, high degrees of uncertainty and incomplete data are always built in. Global Benchmarking brings powerful signal and context to what were previously individual analyses. By combining the right metrics with the right peer groups, Standard Metrics has reset the bar on creating a single source of truth, for both investors and portfolio companies.