SaaS: Metrics that Matter

🎯 Metrics that Matter: Guiding Our Venture Builder’s Strategy

As a Venture Builder, gaining continuous insights into the performance of our portfolio ventures is of utmost importance.

We give great significance to the following metrics:

1️⃣ Growth (MRR / Yearly)
Of course, growth is essential. Monthly MRR growth is closely monitored, and we constantly compare the ARR with 12 months before. This allows us to promptly detect any anomalies (negative or positive) in the growth.

2️⃣ Churn
Customer retention is crucial. We analyze absolute churn (% of lost customers) and relative churn (% of lost MRR). A yearly churn rate below 10% excites us! A higher churn is an alarming signal for us, although this, of course, greatly depends on the product and the market.

3️⃣ CAC Payback Period
Recovering customer acquisition costs in a timely manner matters. While SaaS companies usually target a CAC Payback of <12 months, what we consider good depends heavily on the total customer lifetime value. So let’s move on to the following metric which helps us put this into perspective.

4️⃣ LTV/CAC
A healthy business requires an LTV/CAC ratio above 1, ideally trending towards 3. If it exceeds 3, it often signals a need to scale sales and marketing efforts. This makes the LTV/CAC ratio very important in determining the business strategy.

5️⃣ Gross Margin SaaS
Gross margin SaaS provides a transparent view of profitability after deducting the cost of goods/services sold. Our focus is on achieving a percentage above 80%. These percentages make it realistic to achieve high company valuations in the future.

🔍 We also keep a watchful eye on these metrics for ventures potentially entering our venture builder.