Why is it ok to generate less than $1 of revenue for each dollar of operating loss? The reason is SaaS revenue is typically very high quality, paid up front, contracted for at least 1 year, has a low cost of maintenance, and most importantly recurring. The recurrence means once you’ve got the customer, you do not lose them and they become an annuity. The median net dollar retention of these companies was 115% in Q2, meaning that in future years the revenue from each customer actually grows over time. Cash efficiency is one of the most important metrics measures in SaaS, and combined with net dollar retention, the two metrics are the greatest drivers of value in our view.
Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at firstname.lastname@example.org://blossomstreetventures.com/metrics/