Annual Recurring Revenue Greater than Cash Burned

One of the metrics I like when thinking about SaaS company efficiency is annual recurring revenue (ARR) being greater than or equal to cash burned all time. Successful SaaS startups suffer from the J-curve where things start out with steep losses while revenue begins to ramp up and eventually revenue grows much faster than losses (hopefully!).

Here are a few thoughts on ARR being greater that cash burned:

When considering a SaaS startup’s capital efficiency, look and see if the annual recurring revenue is greater than cash burned. If so, and there’s a good growth rate, it’s likely a sign of a potential successful outcome.

What else? What are some more thoughts on ARR being greater than cash burned for SaaS startups?

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