SimSaaS provides operational forecasting for founders by extending their KPI's and flowing those into a CFO-grade financial model. As a result, it's also a great place for investors to add value to their portfolio companies through zero-effort access to latest metrics and consistently-formatted (and comparable) forecasts for the startups they support.
This view is enabled through double-opt in request/approval. The time and effort saved on swapping files and basic data sharing is already being used by investors to help startups identify bottlenecks and patterns in their businesses -- areas of potential leverage. This mode also shows the founder assumptions that went into the forecast.
The investor mode in SimSaaS is still in private beta. If you'd be interested in joining the group, let us know by leaving a comment or connecting over our website chat!
One of the things a great CFO can do for you is estimate the value of your startup. A version of this guidance is now available through SimSaaS!
The Financial Forecast area now includes a "Valuations" tab, providing you with a time-based view of estimated changes in value over time, using three common methodologies: a venture capital valuation indicative of speculative future value, fair market value using a formula based on current revenue multiples, and seller discretionary earnings based on the present asset value of the business.
These methods will continue to be refined as we learn more about the ecosystem and improve our modeling.
As of today, we are live internally with the first version of an API to retrieve forecast data and upgrade growth models and metrics in real-time.
While too early to be used externally (formats can and will change), this sets the stage to easily connect key points of data from products like Baremetrics, ProfitWell, Stripe, Chargebee, Xero, and QuickBooks, keeping the model that powers your forecasts up-to-date in real-time.
In the future, this can be used to build new products and enable clients to connect SimSaaS data to their own dashboards and BI tools.
If you're interested in API access to your forecast data, shoot us a note. We'd love your feedback as we develop the foundations!
The Financing section just got an upgrade for anyone considering alternatives to venture capital. Lighter Capital joins the list of supported structures, alongside indie.vc, Earnest Capital, and TinySeed.
Lighter Capital modeling is available in all free and paid plans.
NOTE: This structure and the output have not (yet) been reviewed by Lighter Capital. However, the terms have been implemented after a careful reading of their site and terms, and is based on samples of their structure provided by founders that have considered or are currently considering investment from the financier. If you have familiarity with Lighter Capital and would like to recommend changes or improvements, we'd love to hear from you via twitter, or email at firstname.lastname@example.org.
I get asked pretty frequently about churn rates being available as an input to the modeling that happens underneath the SimSaaS hood.
The truth is, although it's easy to multiply last month's revenue by a fraction to get a new MRR number, gross churn is a terrible way to forecast the growth of a SaaS business, which lives and dies by the survival of its subscriptions. And what dictates survival? Product stickiness, aka "long-term cohort survival rates."
To illustrate this point, consider the following two lives of the same SaaS company.
In both cases, we will assume fairly normal 8% churn MoM of monthly subscriber. Both are enjoying good growth for now (although the weaker one doesn't know he's living in the worse universe), thanks to a referral program that's generating 4 new leads per signup. Awesome!
But what happens when each has a different percentage of subscribers cancel or stay with the service long-term?
First, the weakest case -- everyone cancels eventually. This is a common situation with SaaS products with weak fit. As soon as acquisition slows, revenue will flatten and ultimately decline. The product simply isn't mission critical, or is easy to replace with a competitor.
Before you think this is terrible ... keep in mind that the longest-lived customers will still subscribe for almost 4 years!
And here's the revenue:
Looks okay at $59k average MRR. Right?
But what would happen if we figured out a way to create a moat around our business, such that canceling is inconceivable for 75% of our customers? The kind of product that people plan to buy and keep as long as it's sold. The kind where switching to a competitor isn't easy, or perhaps just not worth it?
Revenue on the same time horizon nearly doubles to $116k average MRR!
Maybe 75% feels unrealistic, too ambitious for your product strategy. Let's lower it to 35%. Roughly 1 out of 3 of your paying customers absolutely loving your product for the price they pay. Revenue becomes this:
Thanks for learning more about the stickiness feature. The ability to select a long-term retention rate is available through our Advanced plans. You can find the slider under "Product."
When forecasting gets 100x faster, new opportunities emerge. One of those is spending more time reflecting on trade-offs and strategy. Another is having the ability to examine the consistency and accuracy of our forecasts over time.
The Forecast Vault is the last feature to be included in the public beta (coming soon!). As an archive of all previous forecasts, it provides a reviewable history of changes to your forecast and your growth model over time.
The vault provides a proof of increasing predictability. In the early days, this may simply indicate the business has settled on a price range, revenue target, or initial team size. Latter, it can demonstrate a lock on your go-to-market model.
It also provides the first clue at increased opportunity. A sudden uptick in forecasts revenue, cash, or runway can signal that an optimistic scenario has come to fruition.
The inverse is also true. A dip or downward shift in the forecast can mean that expectations have been adjusted towards numbers now considered more realistic.
Forecasts can be redacted from the vault but they can't be edited. As such, it provides an unbiased audit trail of how a founding team has been thinking about their business, a powerful demonstration for current team members, investors, and future prospects.
The Forecast Vault is available to annual subscribers to our Advanced and Expert tiers. Not ready? No worries. Your free SimSaaS account will automatically archive your forecasts into your vault so you can access them later.