SaaS Capital Blog

May
05
The Rule of 40 postulates that the growth-rate-plus-profitability-margin of a healthy growth stage SaaS company should be at least 40%. It captures both valuation drivers of a SaaS business: growth and profit, and trades them off dollar for dollar. While this is a compelling and fascinating ‘rule,’ it is by no means the cut-off line between healthy and unhealthy.

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May
01
Over the years, we have analyzed thousands of SaaS companies and we firmly believe the best metric for benchmarking churn is gross revenue retention which should be benchmarked against companies with similar annual contract values or revenue values per customer.

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Apr
05
The better a SaaS business is at keeping customers, the faster it will grow. This is not a surprise; however, it’s an assertion that is not typically backed up by real data. The graphs below are based on data obtained from our recently completed survey of over 700 private, B2B SaaS companies and give objective, real-world underpinnings to the relationship between retention and growth.

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Mar
15
We have encountered a recent spike of interest in junior debt for SaaS businesses, and since we provide both senior and junior loans (although mostly senior), we thought we would share our perspective on the types of scenarios where subordinated debt makes the most sense.

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Mar
09
Accounting rules are very specific on some things, and surprisingly unhelpful in other areas. There are no Generally Accepted Accounting Principles (GAAP) rules on the type of costs that are included in Cost of Goods Sold (COGS). This is unfortunate because the gross margins of SaaS businesses are very important to the overall performance, profitability, and valuation.

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Feb
24
Two weeks ago, Todd Gardner and I attended the SaaStr Annual conference in San Francisco. This is the SaaS-business-model-specific conference put on by serial SaaS entrepreneur and VC Jason Lemkin. This was the third year of the event and we’ve gone every year. Below are our takeaways from it...

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Jan
04
The following article was originally posted on LinkedIn by Yoav Schwartz, the Co-Founder and CEO of our new portfolio company, Uberflip. It provides a clear example of how debt can be used strategically to fund the growth of a SaaS business.

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Dec
13
We recognize there are a few weeks remaining in 2016, however, it has already been a record year for SaaS Capital, so we thought we would get our update out a bit early.

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Nov
21
We recently published an analysis of SaaS company departmental spending segmented by revenue level, growth rate and annual contract value (ACV). Among the interesting results, we found that high ACV products (annual contract value over $150,000) have higher cost of goods than lower priced products, and that medium ACV products ($5,000 to $150,000) appear to be the most expensive overall to deliver and support.

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Nov
01
After reading our recent white paper What is My SaaS Company Worth? one of our portfolio company CEOs reached out asking about the premium a SaaS business would garner in a strategic sale vs. a re-cap or equity raise. It struck us that this may be a topic other companies might have questions about so we have addressed it here.

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Although we received several outside funding offers, we knew SaaS Capital was the best fit for us at this stage. Working with SaaS Capital we’re able to avoid both the strict requirements of traditional bank financing and the ownership dilution that comes with an equity investor.

Parag Mamnani

Founder and CEO, Webgility

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