When we looked at the fastest growing SaaS companies in our study (those with a CAGR of over 50%) we found an average Quick Ratio of 3.9.
These SaaS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn. They are, in other words, exactly the type of SaaS startup that Mamoon looks for when deciding where to invest.
And, as their high Quick Ratio implies, they have a great chance to continue growing quickly and healthfully, and eventually become one of those fabled SaaS companies with a run rate of more than $10 million.
However, once we started digging deeper, the story became a little more complicated (and more interesting).
InsightSquared56% treat “Existing Customer Renewals” as high priority
The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013
The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8
More than two thirds of SAAS companies experienced annual churn rates of 5% or higher
Internet Sales strategies have a significantly lower CAC of just $0.42
SaaS companies in the $7.5MM-$15MM range are among the fastest growers
Internet Sales strategies have a significantly lower CAC of just $0.42
In 2017, the global adoption rate for biotech soybean amounted to 77 percent.
Growing faster has twice as much impact on share price as improving margins
Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate