Author: semen.ssr
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Bootstrapping
What Is Bootstrapping? Bootstrapping means building a company using your own resources, without external funding, like angel investors or venture capitalists etc. Think of it as being your own investor! 💪 What bootstrappers typically use: Personal savings Cash flow from sales Credit cards Friends & family loans Side gig income 👆 By the way, an…
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Venture Capitalist: What They Do & How They Make Money
A venture capitalist (VC) is a professional investor who manages a fund of other people's money and invests it in high-growth startups. VCs make money through management fees and carried interest, the '2 and 20' model, and take active roles like board seats.…
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Angel Investor: Definition, Examples & vs Venture Capital
An angel investor is a wealthy individual who invests their own money in early-stage startups in exchange for equity, typically $10K–$500K plus mentorship and connections. Unlike VCs, angels use personal funds, invest earlier, and decide faster.…
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Accounts Receivable (AR): Definition, Formula & vs Payable
Accounts receivable (AR) is money customers owe you for products or services already delivered but not yet paid for. It's a current asset on the balance sheet, the opposite of accounts payable (AP).…
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Net Revenue Retention (NRR)
What is Net Revenue Retention (NRR) in SaaS? Net Revenue Retention measures how much recurring revenue you keep from existing customers over time, including expansions, upgrades, downgrades, and cancellations. It is also called Net Dollar Retention (NDR). The blended private-SaaS median sits near 101%, but that number hides a wide segment split.…
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SaaS Gross Margin: Formula, Benchmarks & How to Calculate
SaaS gross margin is the percentage of revenue left after the direct costs of delivering your software, hosting, support, and infrastructure. The formula is ((Revenue − COGS) ÷ Revenue) × 100. Best-in-class SaaS exceeds 80%.…
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Free Cash Flow
What is Free Cash Flow? Free Cash Flow (FCF) is the actual cash a company has left after paying for everything it needs to maintain and grow its business. It shows: How much cash is actually available Ability to fund growth Financial flexibility True operational efficiency 👆 By the way, an interesting fact: Warren Buffett…
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SaaS Rule of 40
The SaaS Rule of 40 says a healthy software company's growth rate plus profit margin should add up to 40% or more. It balances growth against profitability, you can hit it by growing fast, being profitable, or anything in between.…
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SaaS Magic Number
The SaaS Magic Number measures how efficiently your sales and marketing spend turns into new recurring revenue. The formula is (Net New ARR ÷ Prior-Quarter S&M Spend). Above 0.75 signals efficient, scalable growth.…
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SaaS Quick Ratio
What is SaaS Quick Ratio? SaaS Quick Ratio measures how much a company’s revenue is growing compared to its losses. It answers the question: “For every dollar of lost revenue, how many dollars of new revenue are we generating?” How to Calculate SaaS Quick Ratio? The Formula for SaaS Quick Ratio SaaS Quick Ratio =…
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Upsell Rate
What is Upsell Rate? Upsell rate measures how successfully you convince existing customers to buy more expensive products or upgrades . It shows: Effectiveness of upgrade offers Customer satisfaction with current products Growth potential from existing customers Success of your value ladder 👆 By the way, an interesting fact: Studies show that the probability of…
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Renewal Rate
What is Customer Renewal Rate? Renewal rate is the percentage of customers who extend their subscriptions or contracts when they expire. It tells you: How many customers actively choose to stay The strength of your customer relationships The effectiveness of your product/service Customer satisfaction levels 👆 By the way, an interesting fact: Studies show that…