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November 2020

Elements of Finance

The latest news, tips, and techniques in SaaS finance.

Why You Should Hire Agencies & Consultants (for everything you can)

We’ve spoken before about how we recommend startups try out agencies for their finance needs before they can justify a full time employee. However, many larger companies don’t need their full finance team to be in-house either.

Rand Fishkin, founder of Moz and Sparktoro, speaks about his slow transition from relying on full time employees to frequently choosing consultants for his engineering, marketing, and finance needs. We have our own opinions, but it’s worth the read.

Recurring Revenue Makes Forecasting the Recovery Easier

Stickiness of revenue improves the reliability of forecasts. The recurring revenue model increases stickiness, but it doesn't guarantee growth, which is an important part of any forecast.

SaaS businesses need to be heavily capitalized in order to avoid getting stuck in the SaaS cash-flow trough. While this can be annoying to operators and appear risky to investors, the trade-off is easily worth it for the consistency in revenue, particularly during times of economic recovery.

North Star Metric: What is it and How to Find your Company's Metric

The measurable metric that’s most predictive of your company’s long-term success is your North Star Metric. For a SaaS business that metric might be year-two retention, and for an E-commerce company it might be weekly first orders.

For some, it might not be just one metric, and for others it may change over time. But, the purpose of the north star metric is to add focus to the "how to get there" of long term strategy.

As Venture Capital Rebounds, What’s Going on With Venture Debt?

We, along with other SaaS finance providers, spoke to ExtraCrunch about the SaaS finance market in 2020 and where we are at the moment. Alex Wilhelm covers the effect of PPP on the market and how overall, founders' views towards venture debt have improved.

“[F]ounders think that venture debt has become more founder friendly [and] has led to more deals over time, it’s just that 2020 and its particulars have skewed the numbers." - Alex Wilhelm

Elements of Finance

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