What are the 5Cs of SaaS Finance?
What is MRR Growth and why is is important?
Bessemer Venture Partners is an active investor in many high profile SaaS businesses. Bessemer has published a number of widely distributed and read papers on SaaS finance and SaaS metrics. "Bessemer 5 Cs of SaaS Finance," "Top 10 Laws for Being "SaaS-y," and "Bessemer's Top 10 Laws of Cloud Computing and SaaS" are papers and presentations available at bvp.com or any number of web sites.
The Bessemer publications cover the key attributes of well-run and well-managed SaaS businesses. Key metrics such as Customer Acquisition Cost(CAC), Customer Lifetime Value (CLTV),MRR metrics are defined and discussed within the context of key operating ratios for subscription companies.
MRR growth (monthly recurring revenue growth) is the key metric for many in the SaaS community, with an extensive following in the venture capital marketplace. If you've attended a VC conference or are actively engaged in raising money, you likely be asked many questions about your MRR growth.
In a Powerpoint deck, the MRR growth calculation looks quite neat and simple. In the real world, calculation of this metric can be extremely complicated. Such reports are typically produced in Excel because accounting and finance systems lack the ability to generate such a report. The calculations, formulas, and record keeping required to produce MRR growth reports become exponentially more complex as your customer base, product packaging, and operations grow.