SaaS Industry Financial Model
The SaaS Industry Financial Model flow is a simple yet robust model that you can use to help you estimate the valuation of your software-as-a-service (SaaS) company. The model imports your Xero/QuickBooks data and your accounting data will also update daily, so that your model is always up-to-date.
With this flow you will be able to:
- Map your chart of accounts to MRR/non-MRR revenue categories and basic expense categories
- Set key SaaS metric assumptions to drive your forecast
- Visualize how your valuation will grow over the coming years
- Track your revenue and expense progress so that you can ensure you are on-track to your projected valuation
- Access 2 different valuation methods that you can rely on:
- A valuation based on discounted cash flow
- A valuation based on venture capital firm Bessemer Venture Partner’s method Learn more
If you’ve ever wondered why your investors are fixated on NRR and CAC payback period, this model is probably right for you. We leverage excellent data provided by Bessemer Ventures to identify the most important metrics a SaaS company needs to fixate on in order to scale.
Our model is gives SaaS companies a simple and straightforward way to make a forward looking financial plan, and, most importantly - track progress along the plan automatically.
In order to provide fundraising support (and motivation) we also provide valuation reference points at each step of the way, using two commonly used valuation methods:
1) Comparable Benchmarks
This methodology uses valuation multiples from other SaaS companies in order to compute a valuation. In order to do this, your company is benchmarked to other SaaS companies in order to compute where in a valuation range the company should be valued - for example, a company that scores highly on it’s benchmarks would expect to raise at a higher valuation than one that scores lowly.
2) DCF Valuation
This methodology uses a statistical sample set of 1119 seed stage startups over a 10 year period in order to calculate exit probabilities at each funding stage. For exit valuation, we leverage live stock market data, in order to reflect the sentiment and valuations of the market at different points in time.
Input - SaaS Account Mapping
Input - SaaS Account Mapping sheet is where you will be able to map your chart of accounts to more specific categories. This includes:
- Specifying which accounts are monthly recurring revenue (MRR) or non-MRR
- Categorizing your expenses as Sales & Marketing, General & Admin, Research & Development, or Cost of Goods Sold
- Distribute more complex expense accounts like salaries to different categories using “breakdown categories”
The “Step 2” section of this sheet gives you the ability to accommodate more complex accounts that may map to several different expense categories. For example, if you have an account for “Payroll”, you can create a breakdown category and distribute the expenses across multiple expense categories based on a percentage distribution.
Input - SaaS Assumptions
Input - SaaS Assumptions is where you can input your company’s projected operating and expense metric targets.
These values will be the primary drivers that determine your company’s valuation.
SaaS Long-Term Projection
SaaS Long-Term Projection sheet gives you a birds-eye overview of your projected revenue, expense, and valuation metrics based on the inputs you specified in the previous 2 sheets.
Use this sheet to double-check that your projected financial and valuation metrics look correct, and to also visualize your SaaS company’s projected progress in the coming quarters and years.
SaaS Performance Tracking
SaaS Performance Tracking sheet is where you will be able to keep track of your SaaS company’s performance over time. As time passes, you will be able to compare your company’s performance against target KPIs to make sure you are on-track to reaching your desired valuation.
Use the Time Period dropdown in the “Real-Time Performance Tracking” section to track performance on a monthly, quarterly, or annual-basis.
SaaS Valuation Calculator
SaaS Valuation Calculator sheet is the final step in setting up your customized valuation.
- Specify your company’s financial plan, including details like your current round of funding.
- Then, select up to 5 comparable public companies to base your valuation on (only applicable to Discounted Cash Flow method).
- Lastly, select the method of valuation you would like to use using the dropdown in the “Valuation” section
You also have the option of getting a more thorough explanation of the valuation calculation and more granular control over the calculations by clicking the “+” icon to expand the collapsed sections at Row 149 (Discounted Cash Flow method) and Row 203 (Bessemer Ventures method).
Creating the model
To create the model, find the “Saas Industry Financial Model” flow in the gini webapp. Ensure you have connected the required apps - this flow requires at least one accounting app (either Xero or QuickBooks) and Google Sheets.
Then from the flow page, select the organisation you want to create the model for and click the “Create Model” button.
Once your flow is created, you will be able to find it in the “My flows” section of the dashboard. Click on the “Open flow” button to see the model in Google Sheets.
Can I make edits to this model?
This model has many complex interdependencies between its sheets. Rearranging sections, moving cells, and adding new rows or columns can easily break the model.
We recommend only making edits to the cells designed to be changed based on your input, which include:
- Input cells indicated by blue text
- Dropdown cells
- Expandable sections indicated by the “👈” emoji
If you are looking for additional functionality on this model, please reach out to us at firstname.lastname@example.org for feature suggestions.
Can I make copies of this model?
While you can make copies of the model to a new spreadsheet by using Google Sheet’s copy spreadsheet or copy sheets features, the newly generated copy will not sync with subsequent updates from your accounting app. Only the original model sheets in your gini spreadsheet will sync with your accounting app.