SaaS Start-up Metrics from an Investor’s Point of View: SaaS Math
Mark MacLeod, General Partner, Real Ventures is a frequent advisor and contributor to the efforts of the Canadian-based Medical and Related Sciences (MaRS) . He often presents during their best practices speaking series and contributes to the organizations’ related incubator programs.
His latest presentation, SaaS Math, given on May 24th, is a pragmatic and hands-on look at which metrics are most relevant and valued by SaaS investors. I’ve included both the slides and video below.
Using Metrics to Define a Profitable SaaS Business Model
In this presentation Mr. MacLeod covers the key pricing decisions and metrics that need to be used for managing a recurring revenue business. He also explores the most important customer metrics for new ventures including Average Revenue Per User (ARPU), Cost of Acquisition (CAC) and Customer Lifetime Value (CLTV). Related metrics on acquisition, conversion, churn and referrals are also mentioned throughout the presentation and slides. He covers the specifics of SaaS pricing and how freemium can be effectively used in a SaaS business model. He ends the discussion with an analysis of early stage valuations.
Bottom line: The presentation SaaS Math provides a useful framework of analytics for software companies looking to attain recurring revenue targets while still investing heavily to grow their businesses.