If you read my blog regularly you know I love (LOVE) metrics. So no surprise that when River Cities Capital released an overview of SaaS operating and valuation benchmarks, I hung on every juicy detail. It’s chocked full of them – I’d highly recommend your reading the full report. But if you’re too busy for that, below are some of the key take-aways. I’ve added color commentary of my own that’s more relevant to earlier stage companies as well. The methodology here was great. They took the 92 public SaaS companies and analyzed their key operating metrics. Beyond that, they actually went back in time and looked at the earlier stage periods for these companies so we can track how…
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SaaS
The growth imperative (but beware)
First off, a note of apology. It’s been months since I’ve posed here. Not for lack of desire – more about some combination of crazy busyness and lack of proper prioritization. I miss it and am going to try to step it up. This is a post about the importance of growth, about the current market environment and a note of caution if the growth imperative changes rapidly to the profitability imperative. A few months ago we held a “SaaS Summit” for about 130 people from across the Foundry Group portfolio. It was a great chance to compare notes, meet far flung colleagues (“cousins” as we sometimes refer to employees at different portfolio companies) and discuss a variety of topics…
SaaS Nomenclature
This has come up a few times so it seemed worth putting out there. It’s important to get a consistent set of terms when talking about your business. For example when you say sales do you mean booking or revenue? When you talk about revenue do you mean recurring or total? Is churn net of upsells or is an upsell a new sale? If bookings are the total contract value of everything you sold in a period, how do you normalize for different contract lengths? Are renewals counted in bookings or broken out separately? However you do it, just be sure to be both consistent and clear about what each term means. Below is something I’ve used for several of…