Priti Casaretti

a16z Podcast | Valuing Today's Fast-Growing Software Companies

Scott Kupor, Jamie McGurk, Preethi Kasireddy, Scott Cooper, Priti Casaretti

The perceived SaaS bubble is a result of applying traditional perpetual license valuation metrics to subscription models, which inherently delay revenue recognition while incurring immediate customer acquisition costs. Successful SaaS viability instead depends on leading indicators such as deferred revenue, stable LTV-to-CAC ratios, and low churn rates that validate long-term customer stickiness and economies of scale. As these companies mature beyond six to seven years, recurring revenue scales to justify initial investments, ultimately driving the margin improvements that current periodic profitability metrics often fail to predict.