Growth Proxies and SaaS: How They Can Be Used to Measure Business Success

Lily Ruaah, 04 January 2024

As an investor, it’s not always easy to work out where you should be putting your money. Especially as data tends to be backwards-looking. Growth proxies can be a great way to (try and) predict where a company is headed.

By analysing these indicators, investors can gauge the potential for growth and expansion, helping them make more informed decisions. It’s crucial, however, to balance these proxies with other forms of analysis and to be aware of the inherent uncertainties in predicting future growth. It’s not an exact science!

What is a growth proxy?

A growth proxy is an indicator that can tell you whether or not a company is growing. Unlike traditional financial metrics, which often focus on past performance, growth proxies provide insights into the future potential and expansion capabilities of a business.

Popular growth proxies to look at are:

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Full accounts vs. limited accounts

A company doesn’t need to register full accounts unless its turnover is £10.2m or more. This means you might find yourself in the challenging position of trying to measure the growth of a company with limited accounts. With that in mind, there are still metrics you can look at.

You can find information on debt taken, which is a great indicator of growth. If a company is taking on more debt, they’re most likely growing. There’ll also be information available on employee count, which is a great indicator of growth. However, there are instances where this won’t be true—the numbers can be misleading and nothing is definitive on its own.

Growth proxies and SaaS

When investing in different industries, it’s crucial to recognise that growth proxies vary significantly. For instance, in the Life Sciences sector, the size of the team may not necessarily reflect the success of the business. Companies in this field often operate efficiently with smaller teams, even when performing well. Instead, other metrics like the amount of credit taken can be more indicative of growth. This highlights the need for industry-specific analysis when evaluating potential investments.

In this article, we’re focusing on SaaS (Software as a Service). If you’re looking to invest in a SaaS company, you’ll be searching for specific criteria—below, we’ve listed the most relevant growth proxies for SaaS investors.

Employee headcount

In SaaS companies, the number of employees is a primary growth proxy. An increasing employee headcount, especially in sales and development teams, suggests that the company is scaling up its operations. This expansion can be a strong indicator of a company’s confidence in its growth trajectory.

Employee wages

Alongside headcount, the average wage level within the company is also telling. Higher wages can indicate a company’s financial health and its ability to attract and retain top talent, which is crucial for innovation and competitiveness in the SaaS industry.

Taking on debt

Contrary to traditional viewpoints, debt in a SaaS company isn’t always a negative sign. When debt is used strategically to invest in growth areas like marketing, product development, or global expansion, it can be a positive indicator of a company’s ambition and growth prospects.

Increase in cash flow

Monitoring the cash flow is essential. An increase in cash flow, especially from operations, signifies that the company is generating more revenue, which is a key indicator of healthy growth.

Regular fundraisings

The frequency and scale of fundraisings are important. Regular fundraisings, whether through debt or equity, can signal market confidence in the company’s future. Additionally, the multiples at each fundraising and the type of investors (such as venture capital or institutional investors) participating can provide insights into the company’s valuation and growth prospects.

Research and Development expenditure

Finally, investment in Research and Development (R&D) is particularly crucial in the SaaS sector. High R&D spending indicates a commitment to innovation and future growth. It’s a sign that the company is not just maintaining its current offerings, but is actively seeking to develop new products and solutions.

By examining these specific growth proxies, investors in SaaS companies can gain a comprehensive understanding of a company’s potential for growth and make more informed investment decisions. But these indicators, while painting a picture, are never the full picture, so make sure you’re using several indicators and data points to make your investment decisions.

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Using Beauhurst to find growth proxies

BeauhurstInvest stands out as a comprehensive tool for investors seeking detailed insights into companies. It provides an extensive database that includes financial data, investment history, scaleup signals, and much more. This wealth of information makes it an invaluable resource for identifying and analysing growth proxies.

Watch our platform demo video to learn more about how you can use Beauhurst to monitor growth proxies.

00:00: If you're looking to invest in a Software as a service company, you can use Beauhurst to find more data on specific companies. 00:08: Start on the advanced search section on the platform, and narrow down your search by adding company criteria. 00:15: You can include location 00:18: And you can include what the company does 00:21: In this example, we are looking at software as a service companies. 00:26: You can choose the stage of evolution for companies you want to invest in 00:31: In this example, we have selected seed, venture and growth stages of evolution 00:37: You can then search for companies. 00:40: From here you can search through companies. One way to narrow down who you are looking for is to search by fundraising total. 00:48: Select the desired company, in this example we have selected Copper. 00:53: From here you can access this companies financials. 00:57: Including their employee headcount 01:00: And how much credit they have taken out 01:03: This is just two examples of data you can find on Beauhurst even with limited accounts filed. 01:09: There is a lot more data on the Beauhurst platform. To find out more, book a demo or speak to a member of our team.

How to:

There is a lot more data on the Beauhurst platform that you can access through BeauhurstInvest.

For more information, book a demo with us or speak to a member of our team.


Investing effectively requires more than just analysing historical data, as such information primarily reflects past performance. This article emphasises the importance of using growth proxies as a tool for predicting a company’s future direction.

By examining these indicators, you can gain a clearer understanding of a company’s future prospects, which traditional financial metrics might not fully capture. Though growth proxies are beneficial, they should be balanced with other forms of analysis and a recognition of the uncertainties inherent in predicting future growth. This balanced approach can help you make more informed decisions in a dynamic market like SaaS.

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