Cash Efficiency in SaaS

Cash efficiency is one of the most important metrics in SaaS. Since the revenue at SaaS companies is largely recurring, we measure it as ARR / net investment. Formulaically it’s revenue / [equity + debt — cash]. We did an analysis looking at cash efficiency of the 73 most recent publicly traded SaaS companies at the time they went public. Using the equation above (revenue / [equity invested + debt — cash]), we were able to observe the cash efficiency of each company. The conclusion: if you can generate $0.60 cents of revenue each year per $1.00 of investment in SaaS, you’re at the median of successful SaaS businesses that went public. The average was $0.92. Below is the data. <a href="https://blossomstreetventures.medium.com/cash-efficiency-in-saas-bd7b7300eeeb">Visit Now</a>