Published on February 16, 2016
An essential part of businesses is obviously the financials. The thing is however, that a typical visionary entrepreneur is often not a star at doing the financial modelling and key metric analysis needed to assess if a business is venture material. There are plenty of resources out there that provide knowledge for founders and typical non-finance professionals.
This is the first of more Finance Essentials blogs and are intended to give entrepreneurs a clean overview of resources to understand the financials of businesses.
As SAAS has been around for quite some time there are plenty of resources about the financials of these type of businesses. However, I still see business plans, which do not have the must have metrics or miss the logical order of preference for VC analysts. The reason is of course that there is no standard. But, there are leading resources every SAAS entrepreneur should know.
1. SaaS Metrics 2.0 by David Skok (http://www.forentrepreneurs.com/saas-metrics-2/)
This is the holy grail of SAAS financials. Basically every blog, article or piece of SAAS financials text cites this article by David Skok. If there was a ranking based on citations like in scientific journals, this article would have been the base article for all others. Although it is quite long, a basic understanding of ARPA, MRR, CAC, LTV and ratio’s is what you get after reading this article. Consider this level 1.
2. Tomasz Tunguz Blog (http://www.tomtunguz.com/)
Almost daily, but certainly weekly, short to the point insights on key financials of SAAS businesses. The really good thing about the blogs are the graphs, tables and figures that help explain the topics. This makes reading the blog entertaining and very insightful. Reading these article makes you more proficient in not only calculating metrics, but also explaining and understanding more of the underlying principles of the metrics. Consider this level 2.
3. SaaS Club – eFounders (http://saasclub.efounders.co/)
A massive database of curated articles and blogs about all things SaaS financials. The SAAS venture studio eFounders made it somewhat of a sport to gather the best articles on the web about SAAS financials and make them easily searchable. You can search all type of SAAS financials acronyms and find the best articles about them. This resource is useful for entrepreneurs who already know a lot about their financials, but want to improve what they already know. Consider this level 3.