Yes, Cash conversion rate an imp’t efficiency metric in SaaS. Assuming healthy gross margin (>70%), Goal: ARR ÷ (Equity + Debt Raised - Cash on Hand) > 1.0. Note it’s ARR not cumulative revenue. Like rule of 40, often cited, but few really get all the way there.
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The gross margin matters here though. Is it a marketplace biz with 10% contribution margin, or a SaaS biz with 90% gross margin? Better to measure gross margin per dollar burned.
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Yes, I adjust for that. Recurring vs not makes a huge difference too.
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Interesting. Ours is over 100%, but I wouldn’t recommend it in hindsight
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Tweet je nedostupan.
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Fine print: look at lines, not dots. Else, this'd be way out of whack for bio startups, startups that optimize for growth over revenue.
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@brightidea: 96. As in $96 million revenue from $1 million invested (cumulative). I remember when KPCB told me "we don't care about capital efficiency".Hvala. Twitter će to iskoristiti za poboljšanje vaše vremenske crte. PoništiPoništi
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Don't most VCs look at LTV / CAC or CAC payback periods (incorporating gross margin + retention)? We certainly did for all deals
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