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With more than 80% of venture capital make investmentsments occurring in enterprise and with the public markets disproportionately rewarding SaaS companies with big enterprise value-to-income multiples (median is 7.6), it’s no surprise that curiosity Software-as-a-Service is booming. After meeting quite just a few SaaS firms, I’ve compiled a list of my superb characteristics for a SaaS enterprise below.  
  
Attribute 1: Product Is Core to the Operation of the Enterprise The product is essential to the operation of a buyer’s business. For instance, Zuora enables subscription billing; Expensify manages employee expenses; ZenDesk builds buyer support systems. Clients can’t operate without it.  
  
Characteristic 2: Value/Worth Proposition is Straightforward The product is either cheaper than the alternative: hiring an engineering staff to build and maintain a custom implementation of the product;  
  
Or provides network effect benefits otherwise not possible to find: LinkedIn’s network effects drive the adoption of LinkedIn’s applicant tracking system;  
  
Or affords sophisticated technology that is tough to copy: Infer builds machine learning models on top of sales data to improve firm performance. Not each firm has ML expertise.  
  
Attribute 3: Finances Its Own Growth  
The company benefits from negative working capital and shorter time-to-market.  
  
Negative working capital means prospects pay at first of a month or quarter or year to use the product. These customers pay to improve the software over time by providing money up entrance, reducing the cash wants of the business. Because prospects are paying to improve the product, somewhat than shopping for a "production-ready" enterprise product, the corporate 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 needed by enterprise customers. This also reducing time to market and provides revenues and product feedback within the brief term.  
  
Characteristic 4: Efficient Sales Model  
The corporate is able to recoup its price of buyer acquisition, be it on-line marketing or inside/outside sales, in less than a year. Ideally, the corporate provides 12 month contracts and the company may be profitable on a customer before the customer has an option to churn. Hand-in-hand with this concept is strong buyer retention.  
  
Attribute 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 buyer acquisition costs and will increase sales advancedity.  
  
SaaS firms can be massively valuable and for good reason: their products are core to their prospects’ companies, offer something which is exclusive within the market (cheaper, better), finance their own progress by environment friendly sales models and ideally set up market leadership.  
  
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