Why Venture-Backed SaaS Startups Should Avoid Multi-Year Prepaid Deals

Dave Kellogg argues that venture-backed SaaS startups should avoid multi-year, fully prepaid contracts because they deviate from industry norms and create complications with investor expectations, financial metrics, and acquisition valuations. While financially beneficial in isolation, these deals obscure standard SaaS metrics, complicate churn calculations, and can reduce acquisition value due to deferred revenue treatment and accounting complexities.