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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 huge enterprise worth-to-income multiples (median is 7.6), it’s no surprise that interest Software-as-a-Service is booming. After meeting quite a number of SaaS firms, I’ve compiled a list of my excellent 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 buyer’s business. For instance, Zuora enables subscription billing; Expensify manages employee bills; ZenDesk builds buyer help systems. Clients can’t function without it.  
  
Attribute 2: Cost/Value Proposition is Straightforward The product is either cheaper than the choice: hiring an engineering staff to build and keep a custom implementation of the product;  
  
Or provides network impact benefits otherwise not possible to search out: LinkedIn’s network effects drive the adoption of LinkedIn’s applicant tracking system;  
  
Or offers sophisticated technology that's tough to replicate: Infer builds machine learning models on top of sales data to improve firm performance. Not every company has ML expertise.  
  
Attribute three: 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 12 months to use the product. These prospects pay to improve the software over time by providing money up front, reducing the money wants of the business. Because clients are paying to improve the product, rather than buying a "production-ready" enterprise product, the corporate can go to market a lot earlier of their development.  
  
At the outset, the corporate targets the less sophisticated SMB segment which doesn’t demand the compliance, heavy security and integration features wanted by enterprise customers. This also decreasing time to market and provides revenues and product feedback in the short term.  
  
Characteristic four: Environment friendly Sales Model  
The corporate is able to recoup its cost of customer acquisition, be it on-line marketing or inside/outside sales, in less than a year. Ideally, the corporate presents 12 month contracts and the company might be profitable on a buyer earlier than the shopper has an option to churn. Hand-in-hand with this idea is robust buyer retention.  
  
Characteristic 5: Market Leadership The company is already a market leader, is on the path to changing 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 increases customer acquisition costs and increases sales complexity.  
  
SaaS corporations may be vastly valuable and for good reason: their products are core to their customers’ companies, supply something which is unique within the market (cheaper, higher), finance their own growth by means of efficient sales models and ideally establish market leadership.  
  
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