SaaS Capital Blog

Example - Stock Warrant for SaaS Borrowers


When Should You Grant a Stock Warrant to a Lender?

Negotiating a senior debt deal that includes a warrant can sometimes result in a lower interest rate and a better-aligned relationship with an important capital partner. The warrant shouldn't be an automatic feature of every financing, but should never be completely off the table, either, because it has a rational purpose for both parties.

R&D Capitalization Changes - A Tax Trap for Your SaaS Company?

The 2023 tax season (filings for calendar year 2022) is the first time that companies are actually having to deal with 2017 changes to research and development capitalization accounting rules, also known as “Section 174” or R&D amortization rules. These rules were passed into law years ago with the “Tax Cuts and Jobs Act” (TCJA), with a future start date of tax year 2022.

2023 Private SaaS Company Valuations

Using data from SaaS Capital’s recently completed 12th annual SaaS benchmarking survey with the model from the white paper and the current SCI of 7.1, yields a predicted private SaaS company valuation multiple of 4.6x.

2022 Growth Benchmarks for Private SaaS Companies

The most important metric we track in the survey is revenue growth. This is because your company’s growth rate is the single largest determinant of your valuation multiple, and how you compare with companies of similar size and stage determines whether you might see a valuation premium (or discount) to the median valuation of your peers.

2022 Revenue Per Employee Benchmarks for Private SaaS Companies

A common metric by which SaaS companies track their performance is annual recurring revenue (ARR) per employee. This 2021 update explores the median ARR per employee broken down by company size and funding type, equity-backed or bootstrapped.

2022 Spending Benchmarks for Private B2B SaaS Companies

How much do SaaS companies spend on customer support or marketing? In day-to-day SaaS company operations, questions like the above are common. So, we asked survey takers what percentage of revenue is spent on cost of goods sold, customer support/success, selling costs, marketing costs, research & development, and general and administrative. This post summarizes the benchmarking data.

Benchmarking Metrics for Bootstrapped SaaS Companies

SaaS Capital works with both VC-backed and bootstrapped SaaS companies and has seen the advantages of both approaches. However, one situation that is especially interesting is bootstrapped SaaS companies with $3M to $20M in Annualized Run Rate Revenue (ARR). Growing from a pre-revenue startup to $3M (scale-up phase) marks a significant shift and bootstrapping from $3M to $20M creates enormous value for owners. To help support bootstrappers during their scale-up, we wanted to focus on benchmarking metrics for scale-up stage bootstrapped SaaS companies.

Is the Mendoza Line the Ideal Benchmark for SaaS Growth?

A great many founders would be better served by ignoring Mendoza’s line and instead following his example – choosing a path to success on his own terms. Betting on the odds, to strive for a sustainable business strategy over the long term beats chasing the IPO and fizzling out along the way.

New “How to Value a SaaS Company” Framework for 2022

Determining the suitable valuation multiple for a private B2B SaaS is a crucial exercise. The right multiple depends not only on the company’s characteristics, but on broader market conditions at a point in time. There is no one-size-fits-all multiple – but it is possible to make an informed, data-driven estimate.

What Effect Did the ‘Great Resignation’ have on B2B SaaS Companies?

In the 2022 annual SaaS Capital survey, we debuted a new section asking SaaS company founders, management, and investors about their experiences with employee retention -- an evergreen topic, but one which rose to particular importance during 2021, the year of the "Great Resignation."