Thinking more about the post from a couple weeks ago titled Evaluating a Startup Based on Cash Burned vs Recurring Revenue and how the same idea was brought up again two days ago in Bessemer’s 2017 State of the Cloud Report, I’ve come to believe that $1 of cash burned for $1 of net new recurring revenue is the Golden Metric for SaaS.
As an idea, it’s easy to understand.
As a metric, it’s easy to track.
As a way to create value, it’s excellent.
As a benchmark for entrepreneurs to measure against, it’s perfect.
Some startups will choose to burn more than $1 for each $1 of new new recurring revenue, but most won’t have that luxury. Startups that achieve scale, and burn $1 (or less!) for every $1 of net new recurring revenue, will do well for all stakeholders involved.
What else? What are some more thoughts on the Golden Metric for SaaS being $1 of cash burned for $1 of net new recurring revenue?
One thought on “The Golden Metric for SaaS – $1 Burned for $1 of Recurring Revenue”
David, I like simple things … but curious: Do you mean $1 MRR, or $1 ARR?