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With more than 80% of venture capital investments occurring in enterprise and with the general public markets disproportionately rewarding SaaS companies with large enterprise worth-to-revenue multiples (median is 7.6), it’s no surprise that interest Software-as-a-Service is booming. After meeting quite a few SaaS firms, I’ve compiled a list of my ultimate traits for a SaaS business below.  
  
Characteristic 1: Product Is Core to the Operation of the Business The product is essential to the operation of a customer’s business. For example, Zuora enables subscription billing; Expensify manages worker expenses; ZenDesk builds buyer assist systems. Prospects can’t operate without it.  
  
Characteristic 2: Price/Worth Proposition is Straightforward The product is either cheaper than the choice: hiring an engineering staff to build and preserve a customized implementation of the product;  
  
Or provides network impact benefits in any other case impossible to seek out: LinkedIn’s network effects drive the adoption of LinkedIn’s applicant tracking system;  
  
Or presents sophisticated technology that's difficult to copy: Infer builds machine learning models on top of sales data to improve firm performance. Not each company 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 clients pay at first of a month or quarter or year to make use of the product. These prospects pay to improve the software over time by providing cash up entrance, reducing the cash needs of the business. Because clients are paying to improve the product, moderately than buying a "production-ready" enterprise product, the company can go to market much earlier in their development.  
  
At the outset, the company targets the less sophisticated SMB segment which doesn’t demand the compliance, heavy security and integration features needed by enterprise customers. This also reducing time to market and provides revenues and product feedback within the brief term.  
  
Characteristic four: Efficient Sales Model  
The corporate is able to recoup its value of customer acquisition, be it online marketing or inside/outside sales, in less than a year. Ideally, the company presents 12 month contracts and the company may be profitable on a customer earlier than 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 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 buyer acquisition prices and will increase sales complicatedity.  
  
SaaS firms could be massively valuable and for good reason: their products are core to their clients’ companies, supply something which is exclusive within the market (cheaper, higher), finance their own growth via efficient sales models and ideally set up market leadership.  
  
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