The Official SaaStr Podcast: SaaS | Founders | Investors
SaaStr 685: Why Investors Love SaaS with SaaStr CEO Jason Lemkin and QED Partner Amias Gerety on Fintech Beat
Sep 2, 2023
SaaS founder Jason Lemkin and QED Partner Amias Gerety discuss the appeal of SaaS to investors, the rise of SaaS as a valued business model, the cyclical nature of FinTech and its risks, challenges of running a lending business, and the importance of proper controls in startups.
34:58
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Quick takeaways
- SaaS companies' high gross margins and ability to generate cash flow have made them attractive to investors.
- Investors often mistakenly apply SaaS metrics to Fintech companies, leading to inflated valuations and potential fraud issues.
Deep dives
The Growth of SaaS Companies
SaaS, or Software as a Service, has become a popular business model in the tech industry. While consumer-facing tech stocks like Facebook and Amazon dominate the public market, venture capital is driven by the success of SaaS companies. These companies, such as Splunk and Salesforce, provide software over the cloud and generate recurring revenue. Initially viewed with skepticism, SaaS models have proven to be successful, with high logo retention and net revenue retention rates being key factors. The SaaS model's high gross margins and ability to generate cash flow have made it attractive to investors.
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