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Speed to Revenue
January 28, 2020 at 6:15 PM
by Joe Apprendi

A new breed of platform that accelerates time to revenue should have everyone changing the way they position and engage SaaS companies

From unicorns to walking dead most SaaS platforms are viewed as a kind of monolith. They’re usually categorized as one form or another of cloud-based computing power or money saving alternative to traditional IT deployments. While SaaS applications have been around for a while, a new breed of platform is changing the way companies in the space need to be assessed and marketed. These new platforms are more about addition than subtraction in that their true value lies in revenue lift for enterprises rather than operational savings. Yet, they are consistently evaluated according to the same financial metrics as other SaaS platforms despite data that suggests looking at all SaaS companies in the same way is like comparing apples and oranges.

Most VCs today simply don’t take into consideration whether a SaaS platform is an accelerator. They compare all SaaS companies based on the same core financial metrics such as MRR, ARR, ACV, churn rate and LTV. Accelerators, though, are qualitatively different and a deep dive into the data provided by public markets validates the need to filter these platforms first as accelerators will likely perform better overall and have higher valuations even at scale.

SaaS accelerators are qualitatively different

Traditionally, SaaS platforms have been designed to streamline operational and workflow inefficiencies. While platforms that help deliver cost savings undoubtedly have value, those designed specifically to accelerate the process of turning a prospect into a billable customer or drive incremental revenue have a decidedly different utility and corresponding worth. A platform that allows an enterprise to bill two months earlier or creates revenue opportunities out of efficiencies of scale is, in many ways, qualitatively different than a platform that helps reduce overheard or eliminates an organizational inefficiency. There is such a wide spectrum of definition around just what it means to be an accelerator, though, that it clouds the market and encourages a kind of inertia when it comes to assessing and engaging these types of SaaS companies.

Instnt, for example, is built on the premise that easing access to potential customers will result in more top-line revenue for businesses. While it does allow for the effective outsourcing of customer on-boarding, its primary value lay in its potential to lift customer acquisition and gross revenue. X-claim is a platform that creates a global electronic marketplace for bankruptcy claims.