Cash efficiency measures how much new revenue is created for each dollar of operating loss in a given year. To measure cash efficiency, we look at the dollar growth in revenue for the year divided by operating loss for the year. Below is the data and observations from 2025, 2024 and 2023 for SaaS companies that have gone public since October 2017 (75 companies total of which 57 still trade).
The cash efficiency metrics exclude those companies that are profitable, those that have no growth, or those that were acquired between 2017 and 2023. Also we only talk about medians, since averages can be heavily skewed.
Cash efficiency was great in 2023 and dipped in 2024. In 2023, cash efficiency on median was $0.81. That’s an excellent number, because good SaaS companies tend to have 100%+ net dollar retention, meaning the $0.81 recurs year after year, and grows. At $0.81, your payback is a low 1.24 years, and so long as NDR is over 100%, you never lose that overall revenue. Efficiency dipped in 2024 to $0.72, but that’s still a fine number with a payback period of ~1.5 years.
Cash efficiency in 2025 went bananas. The metric exploded upwards in 2025 to $1.13 as profitability has become a priority. That’s a payback period of only 11 months; you’re whole before the year is out and every subsequent year is pure upside. Note that revenue growth was still very meaningful and even improved for profitable companies.
The cost of profitability. The cost of profitability is the growth you forego by not burning cash. In this case, the profitable companies had median growth of 13%. Those that burned cash and had $1.13 cash efficiency grew at a rate of 22% YOY on median. That’s a very large difference, and when compounded over many years with 100% net dollar retention is even more meaningful. A company growing at 22% vs 13% over five years ends up roughly 50% larger, and given we value SaaS businesses on revenue multiples, don’t forsake cash efficient growth for profitability.
The lesson in our view is that some level of cash burn to drive growth is very valuable, so long as you’re cash efficient. Stay in the ~$0.75 cent range and you’ll be in very good company with a strong payback period.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Other resources we’ve built for founders include: SoftwareMultiples.com; softwareMRRcalculator.com; FounderInvited.com, and TwoFoundersTalk.com. Founders are always welcome to reach out to sammy@blossomstreetventures.com as well.