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With more than 80% of venture capital investments occurring in enterprise and with the public markets disproportionately rewarding SaaS corporations with large enterprise value-to-revenue multiples (median is 7.6), it’s no surprise that curiosity Software-as-a-Service is booming. After meeting quite a number of SaaS corporations, I’ve compiled a list of my superb characteristics for a SaaS business below.  
  
Attribute 1: Product Is Core to the Operation of the Business The product is essential to the operation of a customer’s business. For instance, Zuora enables subscription billing; Expensify manages worker bills; ZenDesk builds buyer help systems. Customers can’t operate without it.  
  
Attribute 2: Cost/Worth Proposition is Straightforward The product is either cheaper than the choice: hiring an engineering team to build and maintain a custom implementation of the product;  
  
Or provides network effect benefits in any other case inconceivable to seek out: LinkedIn’s network effects drive the adoption of LinkedIn’s applicant tracking system;  
  
Or provides sophisticated technology that is tough to replicate: Infer builds machine learning models on top of sales data to improve company performance. Not each company has ML expertise.  
  
Attribute three: Funds Its Own Growth  
The company benefits from negative working capital and shorter time-to-market.  
  
Negative working capital means customers pay firstly of a month or quarter or year to use the product. These prospects pay to improve the software over time by providing money up entrance, reducing the money needs of the business. Because clients are paying to improve the product, moderately than shopping for a "production-ready" enterprise product, the company can go to market a lot earlier of their development.  
  
At 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 reducing time to market and provides revenues and product feedback within the brief term.  
  
Characteristic 4: Efficient Sales Model  
The company is able to recoup its price of buyer acquisition, be it online marketing or inside/outside sales, in less than a year. Ideally, the company offers 12 month contracts and the company may be profitable on a buyer earlier than the customer has an option to churn. Hand-in-hand with this thought is robust buyer retention.  
  
Characteristic 5: Market Leadership The company is already a market leader, is on the trail to turning into the market leader, or is operating 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 increases sales complicatedity.  
  
SaaS corporations will be hugely valuable and for good reason: their products are core to their customers’ companies, offer something which is unique in the market (cheaper, better), finance their own progress by means of efficient sales models and ideally set up market leadership.  
  
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