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With more than eighty% of venture capital investments occurring in enterprise and with the general public markets disproportionately rewarding SaaS corporations with large enterprise worth-to-income multiples (median is 7.6), it’s no shock that interest Software-as-a-Service is booming. After meeting quite just a few SaaS companies, I’ve compiled a list of my superb characteristics for a SaaS enterprise below.  
  
Characteristic 1: Product Is Core to the Operation of the Enterprise The product is essential to the operation of a buyer’s business. For example, Zuora enables subscription billing; Expensify manages worker expenses; ZenDesk builds customer help systems. Prospects can’t operate without it.  
  
Attribute 2: Value/Value Proposition is Straightforward The product is either cheaper than the alternative: hiring an engineering workforce to build and maintain a custom implementation of the product;  
  
Or provides network impact benefits otherwise impossible to seek out: LinkedIn’s network effects drive the adoption of LinkedIn’s applicant tracking system;  
  
Or presents sophisticated technology that's troublesome to replicate: Infer builds machine learning models on top of sales data to improve company performance. Not each firm has ML expertise.  
  
Characteristic 3: Funds Its Own Growth  
The company benefits from negative working capital and shorter time-to-market.  
  
Negative working capital means customers pay initially of a month or quarter or yr to make use of the product. These customers pay to improve the software over time by providing money up front, reducing the money needs of the business. Because prospects are paying to improve the product, quite than buying a "production-ready" enterprise product, the company can go to market a lot earlier of their development.  
  
On the outset, the corporate targets the less sophisticated SMB segment which doesn’t demand the compliance, heavy security and integration options wanted by enterprise customers. This additionally lowering time to market and provides revenues and product feedback within the brief term.  
  
Characteristic 4: Environment friendly Sales Model  
The company is able to recoup its price of customer acquisition, be it on-line marketing or inside/outside sales, in less than a year. Ideally, the company provides 12 month contracts and the company could be profitable on a buyer earlier than the customer has an option to churn. Hand-in-hand with this idea is robust customer retention.  
  
Characteristic 5: Market Leadership The company is already a market leader, is on the path to becoming the market leader, or is working in a segment with little viable competition. In SaaS, sales and marketing execution are critical to the success of the business. Competition will increase customer acquisition costs and will increase sales complicatedity.  
  
SaaS firms could be hugely valuable and for good reason: their products are core to their customers’ companies, provide something which is unique within the market (cheaper, higher), finance their own development by means of efficient sales models and ideally set up market leadership.