Tomasz Tunguz Blog · 2016-09-09
· 3555d
Understanding SaaS Burn Rate: Base Burn vs. Growth Burn Framework
Tomasz Tunguz examines how SaaS startups should approach burn rate management, distinguishing between base operational costs and growth-driven spending. He proposes that early-stage companies should focus on profitability at the base burn level while aggressively investing in customer acquisition, with viability constrained by customer acquisition payback periods.
Metrics in this report
Customer Acquisition Payback Period
11months
median
Average across SaaS companies per PacCrest survey
Customer Acquisition Payback Period
15-20months
characteristic range
Fast growing SaaS companies
Early-stage SaaS Annual Growth Rate
3-4xmultiple
characteristic range
Fastest growing early-stage SaaS companies
Mid-stage SaaS Annual Growth Rate
2-3xmultiple
characteristic range
Maturing SaaS companies post-early stage
Public SaaS Company Annual Growth Rate
25-75%%
characteristic range
Public companies with revenues exceeding $100M per year