SaaS Diligence: Growth Accounting for MAU and MRR

  1. Using unconverted practices to predict growth trajectory
  2. Looking at the % of customers who convert before the trial end date to assess spikes in product-market fit

Accounting as a Leading Indicator

Unconverted trial MRR = # of net new sets in the same cohort period that did not convert (converted trials captured in net new MRR)
Example Company A and B have similar new MRRs, and both have above-average trial conversion rates (25%+). But company B has 3x more unconverted trial MRR left on the table. (axes are the same)
Granular breakdown of New MRR vs. Direct Purchase
Example conversion patterns — e.g., 4% of teams who signed up for a trial convert on day 0 of the set.

Some other things to keep in mind:

Consumer trial leading indicators

Next steps

  • The ratio of unconverted trial MRR to new MRR that applies across the board and points to a significant growth trajectory (e.g., the equivalent to SaaS quick ratio of >4)
  • Exact X% conversion before the trial end date for successful companies by day X on a cohort basis as well as for each “stage” of the company (<12 months, 12–18 months)
  • Validate that the above framework applies consistently across different trial models (14-day, 30-day, no credit card, credit card)
  • Dig into the “net new MRR direct purchase” vs. “net new MRR trial” ratio to see if there are any exciting insights there that can be leading indicators

Note: The idea here is to provide another leading “data point” to assess SaaS companies. A stellar team is critical and a market with conviction, vision, core product, and substantial numbers in MAU and MRR accounting (>4 SaaS quick ratio).




Venture capitalist.

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Vicki Peng

Vicki Peng

Venture capitalist.

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