Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.comEveryone loves recurring revenue and rightly so: it’s far more valuable than one-time revenue to VC and acquirers. But, don’t forsake one-time revenue. Whether it’s for services, onboarding, licensing, or some other one-time event, revenue of this type is still valuable especially at early stages. There are three big reasons:
It Preserves Founder Equity. The less obvious reason one-time revenue is valuable is that it prevents a founder from having to raise more cash, and the less cash you raise, the more equity you preserve.
Some of the best SaaS businesses in the world generate a lot of services/one-time revenue as it’s a valuable source of cash and makes the product stickier. The list below shows that at the time they went public, the 107 SaaS companies below on median generated 16% of their revenue from non-SaaS sources and 20% on average. It’s material.
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