SaaS (Software as a Service) is the most VC-investable business model: high margins (70-85%), recurring revenue, low marginal cost, and massive scalability. The SaaS playbook is well-established: PLG or sales-led acquisition → land and expand → reduce churn → expand revenue per customer.
SaaS BP Key Metrics:
- MRR/ARR (Monthly/Annual Recurring Revenue)
- CAC (Customer Acquisition Cost)
- LTV (Lifetime Value) — target LTV:CAC > 3:1
- Churn (monthly/annual) — target <5% annual for enterprise
- NRR (Net Revenue Retention) — target >110%
- Gross Margin — target 70-85%
- CAC Payback — target <12 months
- Rule of 40 — Growth % + EBITDA Margin % ≥ 40
Key Takeaways
- SaaS metrics: MRR, ARR, CAC, LTV, Churn, NRR.
- LTV:CAC > 3:1 and CAC Payback < 12 months = healthy.
- NRR > 110% = growth without new customers.
- Rule of 40 is the benchmark for SaaS efficiency.