The 20 factors that matter most in private SaaS valuations (according to Software Equity Group):
I would say LTV:CAC should be Top 3
Sam Hörbye
2w
I quite like Elena Verna's POV around the importance of Payback Period which ''measures payback *velocity*, or how fast you are able to recoup your initial acquisition investment. If you recoup your acquisition costs quickly (3 months as a B2C, 8 months as a PLG B2B, 18 months as an Enterprise B2B), you’re in a sustainable loop - KEEP INVESTING. Otherwise, you’re just fueling a hungry, dreaded funnel that will drain your resources.'' Link to her post is here: https://www.linkedin.com/feed/update/urn:li:activity:7203466439268184065/
Ben Murray
2w
Nice list. Rule of 40 is always interesting b/c really it's the end result of a lot of underlying metrics.
Everyone will have their own take on this, but it's a solid summary and very helpful for both founders and investors. Personally I would have added 2 additional variables. Customer NPS and some measure of the competitive landscape that the business is operating in.
Man your content is precious, thanks.
Would have thought that LTV:CAC is also weighted high 🤔
Mark Simon
2w
Good stuff. Very consistent with our experience representing SaaS firms $5-20m ARR in their exit process. I would have indexed NRR higher - after all, a company that grows without adding new logos is a great business - but it's all debatable!
Dirk Sahlmer this is great share …very helpful to founder
Helping software founders build the network to win [ARRtist]. Passionate about happiness research and sports business.
2wThis is actually pretty solid, I think. Thanks for re-posting this. We can debate the details. For me personally, I'd see EDITDA margin will have a trade-off with ARR growth, normally. Hence Rule of 40 could even replace these two individual KPIs.