0

India SaaS: TO
Founder
Playbook
Insights from leaders on
building SaaS from Scratch
1
0 to 1 India Saas:
Founder Playbook
Foreword and Introductio
Minimum Viable Produc
Product Market Fi
Go-To-Market Strateg
Product Thinkin
Early Founding Tea
Early Mentor
Unicorn DN
SaaS Metrics & Benchmark
SaaS Founder Resources

Acknowledgements
 Foreword

Foreword from Vani

Managing Director, Kalaari
Kola
The Indian IT Services industry spawned India’s global positioning as a technology knowledge partner. As the next
wave, Indian SaaS companies will create leading global businesses.

Today, IT Services companies from India generate over $200B in revenue. The India SaaS ecosystem can only dream
bigger. In the next decade, SaaS companies from India have the opportunity to unlock over $600B in market value.

With Indian SaaS companies hitting $12B ARR in 2022 (compared to $2B in 2018), India SaaS is truly unstoppable. 

In the past few years, these companies have proven themselves as formidable global competitors, not just matching
but also surpassing their global peers and setting the standards for the industry.

Today, India is the fastest growing and second largest SaaS ecosystem in the world – with almost 100 SaaS startups
generating over $15M in ARR. By 2026, we expect Indian SaaS companies to hit close to $30B in ARR.

At Kalaari, we are active investors in SaaS. We have always been proponents of the
opportunity and supporting early-stage founders. This report is a culmination of our
efforts to support the next generation of founders in accelerating their learning from
those who have walked the path before.


If you are interested in supporting our podcast series or other initiatives in SaaS, 

feel free to reach out to us.
1
 Introduction
Today, as new founders begin to build category-defining companies in
SaaS, we wanted to democratize access to knowledge. Through our SaaS
from Scratch speaker series, we curated deep insights to help young SaaS
founders learn the tools of the trade from successful leaders who have
helped scale SaaS companies.

This playbook is a guide for the Zero-To-One SaaS

journey – important lessons, challenges, and
frameworks from Indian SaaS leaders.

2
 Decoding Minimum Viable Product

Minimum
ABOUT MOENGAGE

Viable
MoEngage is an insights-led
customer engagement platform
for customer-obsessed marketers
& product owners. From F500

Product.
enterprises to mobile-first brands
- MoEngage has helped amplify
customer engagement for all.

with Raviteja Dodda

Founder & CEO, Moengage

WHAT RAVITEJA SAYS

“My philosophy is, everyday in the morning, if you’re not excited about what you
are doing then its time to start thinking about doing something new”

3
 Minimum Viable Product | Speaker Insights with Raviteja Dodda, Moengage

The MVP is the smallest thing you can build that

delivers customer value, and as a bonus captures

some of the value back.

Decoding Minimal
- Eric Ries, author of The Lean Startup

Viable Product
1. Beta testing: 3. Scaling the MVP to different geographies:
In SaaS businesses, it is best to create a beta product As you expand to different geographies, finding PMF for your
(example: Figma representation of your product) to get the product becomes challenging. To establish PMF for the MVP in
market’s feedback. The feedback on the beta will help you each geography, it is important to understand region’s cultural
narrow-down “must-have” features that users will pay nuances. Once you understand these nuances, speak to
money to use. Beta testing is the fastest way to collect customers to ascertain whether the market is ready for your
market insights and efficiently develop the product. product or if your customers need to be educated.

2. Building products in established 4. What is most critical for your MVP:

markets vs. building in a new category: For the 0 to 1 journey, it is most important to have the right set of
initial customers. To help validate your MVP, choosing everyone as
When you have a superior product in an established your customer might not yield best results for future scale. The
market, time spent on educating customers reduces right customers will help you understand user journeys and will
massively. Here, approaching the market soon makes more help you get from MVP to the right product which can lead to
sense than waiting. For a category-creating product, it is repeatable sales.
important to spend time educating customers,
understanding customer feedback, and then incorporating
relevant feedback into your product.

4
 Minimum Viable Product | Kalaari Insights

MVP in the Context of Fundraising

A minimal viable product (MVP) is a product that has the minimum set of features needed to be released to the market and be used by
customers. While an MVP may not be required to raise an initial seed, it is the best way for startups to quickly test their product. Gathering
and sharing feedback from customers on the MVP with investors can be an effective way to showcase product value to investors.

Key points to consider when building a

successful MVP as a SaaS startup:
Identify the core value proposition of
your product
Keep an eye on your competition
andthe latest trends Additional
and focus on building the features that are most
essential to delivering that value to customers.
in the SaaS industry to ensure that your
MVP remains competitive and relevant.
Resources
SaaSMantra Blog on MVP

Prioritize simplicity and ease of use in Be prepared to iterate and

your MVP improve your MVP The real cost of developing an
Aim to create a product that is intuitive and based on customer feedback and market MVP

straightforward for customers to use, even if it demand. Be willing to pivot and add new
SaaSTr on Minimal Selling
has a limited set of features. features or adjust your product's direction
Product
if necessary.
Use feedback from potential customers Kalaari SaaS From Scratch:

to inform the development of your MVP. Conduct Test your MVP with a small Decoding MVP Podcast
surveys, interviews, and focus groups to gather group of early adopters
insights and ideas from your target market. to identify any issues or areas for
improvement before launching it to the
Be transparent & honest with customers wider market.
about the limitations and capabilities of your MVP.
Make it clear that it is a work in progress and that
you are actively seeking feedback to improve it.
5
 Decoding Product Market Fit

A B O U T S K I T

Product
Skit.ai is an Augmented Voice
Intelligence Platform. Skit
helps businesses modernize

market Fit.
contact centers and enhance
customer experience by
automating and improving
voice communications at
scale.

with Sourabh Gupta

CEO & Co-Founder at Skit

W H AT S O U R A B H S AYS

“The hardest days were the early days, right out of college, where we were
trying to sell to large enterprises. My attitude was do everything it takes to win
a customer. Once, at 1AM, we found out that a large tech company was trying to

beat us to a deal with a large bank. I immediately booked a 7AM flight the same
day and was outside the customer’s office to close the deal.”
6
 Product Market Fit | Speaker Insights with Sourabh Gupta, Skit

First to market seldom matters. Rather, first to

Decoding Product product/market fit is almost always the long-term
winner.
Market Fit
1. Signs of PMF
Paying customers or growth in sales is not always the best measure of
4. Zero to one with initial team
PMF. The strongest indication of PMF is customer success. If your In the early days, pre-PMF, optimise for generalists.
customers see tangible ROI from your product and are sharing positive These are ideally people who have worked in multiple
testimonials, it is a strong indication of product market fit. roles before like sales, marketing, product, etc. For Skit,
we had 2 types of people – people who could write
code and people who would do everything else.
2. Defining initial GTM strategy before PMF
The strategy depends on are you hunting
elephants or are you hunting rats? If you have a 5. Red flags pre-PMF
large sales team selling to large businesses then
you should price your product in 6-fig USD. If you A high churn rate is a clear indication of not finding
are selling at $2–10K ACVs, you need a low-cost product-market fit. Raising money won't help bring
marketing engine running repeatable tasks. down the churn rate. So, fix these problems before you
approach investors.

3. Reaching initial customers

6. Founder priorities
Initial customer sales pre-PMF have to be founder-led. The ideal
scenario is to meet your customers face to face. However, if that's not Before PMF, the one singular thing that matters is PMF.
possible cold calling and sending cold emails are still a very To achieve PMF you need two things – (1) constant
underrated channel for reaching out to your customers. You want to experiments that validate your hypothesis about the
make sure you are present in every event, summit or workshop your market (2) talking to your customers
customers attend.
7
 Product Market Fit | Kalaari Insights

PMF in the Context of Fundraising

In order to hit PMF, you do not need perfection of product, large revenue or a large customer base. At Kalaari, while we are willing to fund
Seed without PMF, we are rarely willing to follow-on or invest in Series A or beyond without a proof of PMF. As a rule of thumb, founders
should focus on achieving PMF before raising growth rounds to scale the business.

How do you know you have hit PMF?

1. Revenue & growth
Double-digit growth when you have hit $10K MRR is an indicator of PMF (Source: SaaStr)
Additionally, an increase in ACVs per customer or an increase in usage or accounts per logo can Additional
be an indicator of PMF.
Resources
2. Customer validation Andrew Chen:

0 to PMF

Survey existing users to understand ‘how they would feel if they could no longer use the product?’ Lenny ’s Newsletter:

According to Stephen Millard and Joshua Olusanya, if over 40% of users say ‘very disappointed’ How to know if you’ve got PMF

you have hit PMF (Source: Notion VC, PMF frameworks) In other words, hit +40% customer NPS.
Kalaari SaaS From Scratch:

Decoding PMF Podcast

3. Marketing spend
Ideally, in the earliest, stages of the product development process pull is happening organically
(i.e., without any advertising spending) One of the most common ways that startups die is
“premature scaling,” a term first used by Steve Blank. A business is “scaling prematurely” if it is
spending significant amounts of money on growth before it has discovered and developed PMF.
8
 Decoding Go-To-Market Strategy

A B O U T S H O P A LY S T

Go-to-
Shopalyst re-imagines how digital consumers
discover and purchase products with technology and
data infrastructure that help friction free purchases
from any digital moment that inspires shopping.

Market.
with Neeraj Rajan Rout

W H AT G I R I S H S AY S

“Most important thing for early-stage founders is to

be able to find the right network of people who you
can use as a sounding board and who will challenge
CEO & Co-Founder, Hiver,
you in the right way.”

& Girish Ramachandra


CEO & Founder, Shopalyst

A B O U T H I V E R W H AT N E E R A J S AY S

Hiver is a customer service platform “One of my earliest learnings

for Google Workspace. Hiver helps was that if a customer is
+1500 companies, ranging from new- happy, they will not churn
age unicorns to traditional enterprises, overnight overnight because
deliver a better customer experience. a feature is missing”
9
 Go-To-Market Strategy | Speaker Insights with Neeraj Rout, Hiver, and Girish Ramachandra, Shopalyst

The ability to execute a solid GTM strategy is what

separates successful SaaS companies from the rest.

Decoding Go-to-
Market Strategy 3. Pitching to prospects
Best way to explain the value proposition of your product to
prospective customers is through numbers linked to ROI. Help
1. Building initial GTM: customers foresee success in numbers and then demand a price
accordingly.
In the early days, GTM strategy for any SaaS startup has to
be a founder-led sales engine. Post that, depending on the
type of product, figure out the best GTM strategy for your 4. GTM experiments
product (outbound or inbound marketing) through
experiments. Double down on channels that provide the In the early stages, founders are the only ones running GTM
most ROI. experiments, therefore the scope is limited. However, later in your
journey experimenting with affiliates, partnerships and outbound
marketing can be extensively tried. It is important for founders to not
2. Getting customers to pay try too many GTM experiments at once and keep the number to 2-3
with quality resources leading initiatives.
At times, founders delay asking for money from customers
during pilots. Founders assume they should ask for money
after multiple pilots with the customer. However, asking for 5. Scaling after a few paying customers
money is critical and should be done as early as possible.
For larger enterprises, it may be tough to trust an early- The first sign of growth after a few paying customers is when you
stage startup so varying pricing structures might be an have repeat customers. The next sign is when your existing customers
option. For example, charge a base fee and take a cut of are ready to refer you to another set of customers via word of mouth.
the performance. It is important to be flexible with pricing These are a couple of indications to press the foot on the accelerator
so that you don’t leave any money on the table. and grow in the market.
10
 Go-To-Market Strategy | Speaker Insights with Neeraj Rout, Hiver, and Girish Ramachandra, Shopalyst

6. Optimising product feedback

It is important for founders to know that if customers are satisfied with the product, they won’t leave the product because 1 or 2 features are
missing. Founders need to strike a balance between features that customers want and the product they want to build. Sometimes there is a
huge difference and sometimes it’s just incremental features so figure out what works best for you and act accordingly. One way to tackle
product feedback from customers is – once in a while, show your customers a future design prototype of the product without building it, if the
feedback is positive, start building.

7. GTM for global vs Indian customers

For a SaaS-based product, the customer profile largely remains constant throughout the globe. However, depending on the geography, nuances
in pricing will occur. In some geographies, the buyer is not the user of the product. Therefore, it is important your product aligns with all the
product stakeholders. Additionally, certain geographies require a lot more hand-holding than others so resources in terms of customer support
can prove extremely crucial.

8. Opportunity for Indian founders in SaaS

Post Covid, we have seen a massive scale-up in ‘online-first’ buying. This means that Indian founders and sales people do not necessarily
have to be present in international geographies they are selling to. Most SaaS business transactions have the potential to happen online –
lowering the barriers to entry & growth for Indian SaaS founders.

11
 Minimum Viable Product | Kalaari Insights

GTM in the Context of Fundraising

Typically, a significant portion of capital raised at Series A or beyond should be directed towards sales & marketing. To prove the business
can scale post PMF, founders should showcase initial success of the GTM approach. During investor conversations on GTM, it is crucial for
founders to know (1) Ideal Customer Profile, (2) Key Product Users vs. Key Decision Makers or Buyers of the product (3) Sales Cycles.

Sales Cycle
Benchmarks
Jason Lemkin on B2B SaaS sales cycle lengths
based on annual contract values:
Additional Resources
SalesHacker – Go-To-Market Blog

Deals < $2,000 in ACV should close on average within 14 B2B SaaS GTM has been disrupted forever

days.
"SaaS GTM Checklist" from the Hubspot blog

Deals < $5,000 in ACV should close on average within

Modern GTM Playbook for B2B SaaS

30 days.
Problem Awareness by Nick Reese
Deals < $25,000 in ACV should close on average within
90 days.
Kalaari SaaS From Scratch: Decoding GTM Podcast
Deals < $100,000 in ACV should close on average within
90-180 days depending on # of stakeholders and gates.

Deals > $100,000 in ACV will take on average 3–9

months to close. They can take the better part of a year,
as these purchases are budgets on Annual cycles. Some
deals will be faster, some shorter. This is an average

12
 Decoding Product Thinking

A B O U T C L E V E R T A P

Product
CleverTap helps app-first
brands personalise and
optimise all consumer touch
points to improve user
engagement, retention, and

Thinking.
life-time value. CleverTap is
trusted by 2000 customers.

with Anand Jain

Co-Founder & Product, CleverTap

W H A T A N A N D S A Y S

“For every successful idea that does not seem like it pivoted there are a lot of
micro-pivots. These micro-pivots come from interacting with your own
customers and understanding them better. Micro-pivots are not dramatic
moves, but small, incremental moves that will help you succeed in the long-
term.”
13
 Product Thinking | Speaker Insights with Anand Jain, CleverTap

4. Hiring talent for product roles

Product development is not about perfection, but
To hire talent for product roles, the strategy is dependent
about iteration. on the stage of the company. If you are below $5M in ARR,
the founders are the product managers. As you scale to
$25M-$30M, you then have a customer support team, tech
account manager and further niche roles. To avoid hiring
Decoding Product mismatch, in the early days give your tech team a front-
facing (or customer-facing) role to solve the problem better
for your customers.
1. Validating a product in the early days
5. Laying the product roadmap
While validating a product it is important to frame a basic hypothesis.
Validate the hypothesis by speaking to a lot of customers. When you Anand’s framework for the product roadmap.

speak to customers, you will realise your product will have multiple First, listen to your customers and implement the features
micro-pivots. A sense of micro-pivots helps founders understand the they are asking for. There is a higher chance if one person
product better and makes the customers feel validated. asks for it, the applicability of the features is valid in more
than 1 places. Second, is the speed. If the feature requested
2. Knowing what the customer wants from customers, is already in your roadmap for the next 12
months then move the feature up on the priority list. Lastly,
There is a debate about whether founders should ask customers what get “star customer ” testimonials for each “requested”
they want or should simply innovate for the customer and test the product feature.
response. In most cases, customers know what they want. Therefore,
asking them is the best way out. 6. What sets you apart in the 0 to 1
journey?
3. Releasing a perfect product
To understand what sets you apart, it is important to
Another debate is whether founders should wait for the perfect product understand what does not set you apart. Funding and
or should release an initial product, test, and iterate. The answer marketing won’t set you apart. What sets you apart will be
depends on the kind of product. For example - if the product bugs can customer focus, team focus, and direction focus.
potentially harm a customer’s business, it needs to be fixed. However, if
the product has a lower impact on customer revenues, business, or day-
to-day function (example: the product’s design language) – the product Kalaari SaaS From Scratch:

feature can be polished based on feedback at a later stage. Decoding Product Podcast
14
 Decoding Early Founding Teams

Early
A B O U T W I N G M A N

Founding

Wingman is a conversational
intelligence platform for sales
teams that helps identify
revenue leak and drive

teams.
revenue precision for B2B
sales organisations. Wingman
was acquired by Clari in 2022.

with Shruti Kapoor

CEO & Co-Founder, Wingman

W H AT S H R U T I S AY S

“We were conscious from Day 1 that the first 10 employees of the company were
going to have the greatest impact on the culture of the company. So, when we went
through the process of early hiring, we were deliberate about their principles and
quality of work. We wrote down 3 core principles of company culture we wanted at
Wingman, and began hiring for those 3 principles.”
15
 Early Founding Teams | Speaker Insights With Shruti Kapoor, Wingman

The best teams are not made up of people who need

each other. The best teams are made up of people

who trust each other.

Decoding Early 4. Difficult conversations with founders

Founding Teams Difficult conversations usually include - What is the definition of
success for each co-founder? What is our purpose? What happens
if the product doesn’t work? What is the stipulated timeframe for
1. Finding the right co-founder: success? What is the equity split between the founding team? etc.
The answers to such questions will change from time to time.
Increase the number of people you meet! You can meet new people Therefore, periodic professional discussions on such topics is
through personal networks, events, founder communities, and forums. important.
Always broaden the funnel at the top and then be selective; instead
of making a selection from the few choices you have explored.
5. Mentorship for the founding team
2. Building a strong founding team Not always necessary. However, can prove important for external,
objective feedback during conflict or tough situations. Make sure
To build a productive founding team relationship, start with you incentivise mentors for their efforts – mentors with skin in
assigning distinct responsibilities to each founding team member. the game (for example, equity) will be willing to spend time and
Ensure everyone owns and drives a specific piece of work efforts to help the founding team succeed.
One of the biggest reasons startups fail is because of the founder
conflict. Have a conversation with the founding team about how
different people react to conflict, criticism and feedback. This 6 . Building company culture
exercise will ensure everyone on the team knows how to navigate
conflict with specific people The first 10 employees have the most impact on company
culture. Be deliberate about the values each new early hire brings
Relationship building is key to the success of any team. Personal to the table. Post the first dozen early hires, ensure at least one
relationship building is a constant process – never stop core founding team member has a direct relationship with each
proactively building bonds with each member of the team. new employee you onboard.
16
 Early Founding Teams | Kalaari Insights

Early Founding Teams in the Context of Fundraising

At Kalaari, we believe the founding team is one of the most crucial elements of success. Founders should aim to build a strong founding
team with complimentary skillsets and shared vision. During the zero-to-one journey, it is also crucial to recognise strengthens and gaps in
the founding team.

Startup Hiring Right > Fast

“You’re not looking for tasks they can do this week only. You must have repeatable work for them Additional
to take on. You don’t want to make the same mistake I made early on, when I hired because I was
so busy (right now), without thinking about the ongoing workload (or lack thereof).”
 Resources
– Brian Casel, Founder at Audience Ops SaaS Org Chart

First Startup Hires

SaaS Leadership Org Chart 


(Framework for Seed-Series A companies) Building a SaaS Team

Who should you hire first?

CE Head of Customer Succes

Your first employee

CT Head of Marketin
Head of Produc Head of Finance A counterintuitive system for
startup compensation
Head of Sales
Kalaari SaaS From Scratch:

Decoding Product Podcast
A startup can have all the potential in the world, but nothing can derail things faster than its
“people problems.”

In a study about startup performance, venture capitalists attribute 65% of company failures
to problems within the startup’s management team.

17
 Decoding Early Mentors

Ram has been part of teams

that have created market
capitalisation of over $15B. He
has been part of 3 IPOs and 10
Acquisitions. Currently, Ram

Early

serves as an Independent
Director on the board of
directors of a number of early
and growth-stage companies
like Postman, Joveo,

Mentors.
Simplilearn, HackerEarth,
WelkinHealth, and Neeyamo.

with Ram Gupta

Independent Board Director

W H AT R A M S AY S

“You never do anything alone or by yourself; a whole ecosystem is always there

to support you and provide you with opportunities. Any outcome of your journey
is the result of the combination of people around you.”

18
 3. Compensating a mentor
If you cannot see where you are going, ask someone
It is important for founders to have a conversation on
who has been there before. compensation with a mentor before onboarding them to
the team. Usually, compensation with equity allows the
mentor to have significant skin in the game. For some
mentors, equity donation to a non-profit or a specific
cause can also work out as a form of compensation.

Decoding 4. What mentors look for

Early Mentors The right mentors look for founders who want to play the
long game. Founders who seek to bring about a
fundamental change in an industry are exciting prospects
for mentors. There is a common notion that mentors are
What to look for in mentors like advisors, however mentors like roles where they are
accountable and not mere advisors.
Finding a mentor who will be an active participant in your startup
journey is crucial. Mentorship is a contact sport where mentors have
hands-on involvement in the growth of the business. As a founder, one
needs to choose a mentor who is aligned with the startup’s values,
motivations, and principles.

2. Prioritise skillsets not networks

One of the biggest red flags for founders while choosing a mentor is
when they want to be associated with a mentor for their network.
Networks are non-transferable assets and are hard to build. It is
important to have mentors with niche areas of expertise that Kalaari SaaS From Scratch:

complement the founders knowledge and skillset. Decoding Early Mentors Podcast
19
 Decoding Unicorn DNA

A B O U T F R A C T A L

Fractal Analytics is a

Unicorn 

multinational artificial

intelligence company that

provides services in consumer

packaged goods, insurance,

healthcare, life sciences, retail

DNA. and technology, and the

financial sector.

with Pranay Agrawal

CEO & Co-Founder, Fractal

W H A T P R A N A Y S A Y S

“Tools to overcome difficult times: First, the ability to show up everyday

despite the challenges. Second, the ability to stomach a lot of volatility. In the

entrepreneurship journey, there will be several ups and downs (more downs

than ups in the early days) but you have to focus on what you can control and

keep learning from your mistakes.”

20
 Unicorn DNA | Speaker Insights With Pranay Agrawal, Fractal

Success is No Accident

Decoding

Unicorn DNA
3. Early advisors
1. Advice on the zero-to-one journey
As founders, the most important thing is self-belief.
However, belief should not come at the expense of taking
The first phase of founding a company will be about persisting and
help. Surround yourself with people who can ease the path
sticking with your idea. Fractal spent the first five to seven years getting
and make things faster. Find advisors to fill your gaps – on
to $10M. The initial phase was about learning as founders – learning how
GTM strategy, to find the right networks, even to personal
to do things yourself in a market you may not have experience with, and
coach you on your leadership and decision making style.
learning to sell to and convince companies.

2. Choosing the market 4. Founder priorities

In the beginning, decided to things that do not scale.

Two schools of thought – build in a mature industry with existing
Deeply understand customer needs. Deep insights that
competition or build a greenfield product. Both ways have proven to
you can then use to scale.
be successful – Google was not the first search engine, Microsoft
was not the first operating software. You need to build a
differentiated, innovative product if entering into a competitive
space. 
 5. Co-Founder relationships
On the other hand, Tesla was the first market player in its segment.
Building greenfield products in new spaces requires superior Build trust, prioritize each other, and always have positive
marketing and superior product building. It boils down to how intent for each other. Proactive investment in the
passionately you feel about the idea and the problem as well as how relationship, using a joint mentor or coach, will improve
much energy (physical and emotional) you are willing to invest. the entire organization’s performance. Any investment
Ultimately, success is going to be a function of the amount of energy you can make in understanding yourself and your co-
the entrepreneur is able to bring to the idea and the business. founder will pay off.

21
 Unicorn DNA | Speaker Insights With Pranay Agrawal, Fractal

6. Global sales 9. Constant challenges to think about

Start global sales as early as possible. You have to be in the market you want People: How to develop talent, how to provide people
to sell in, move to the physical geography. Speak to customers in the opportunities they are seeking, how to help people
geography – the best insights will come from speaking to prospective clients. grow and realise their aspirations, how to attract the
Additionally, start building a local team faster. Setting up a successful sales right talen
engine takes time – the earlier you start the faster you can get to a successful
outcome. Culture: How to scale initial founding team culture,
how to engrain client centricity across all team

Staying Relevant: What you are doing successfully

7. Market opportunity today may not be relevant in the future – the need
may be met differently or seize to exist. Do not be
Is the market large enough? It is important to have some sense of the market
afraid of making pivots and expanding product scope
size and demand. You want to chase big opportunities vs. smaller opportunities.
Effort you spend chasing larger opportunities will likely get better results. At the
same time, a large market does not translate into success – you will see lots of
competition. During the initial stages, focus on milestones – first $1M or $10M.
Set these benchmarks/ milestones to demonstrate that what you are doing is
10. Critical for founders scaling
working and this will give you the energy to push for the next milestone.
businesses
Fractal’s Market Opportunity Framework: 
 Being a founder is a new job at every stage: Leading
Number of clients that are addressable > $ value creation for those clients > 10 people vs. 200 people vs. 1000 people is a
percentage cut of the value creation you can take from clients = total market different job. Re-invent yourself as a leader at every
opportunity today step of the journey. Initially, founders need to learn
how to do everything. Later, founders need to learn
how to hire and delegate. As you scale, founders
have to think about building systems and processes
8. Price discovery so everyone in the organisation can work succeed
You have to actively discover pricing through conversations with customers. Constant ability to bring in talent that is better than
Understand whether you have a product that people want and are willing to you in each special areas. Giving them the freedom
pay for. To understand whether customers are willing to pay more or less than to bring their capabilities to play is important.
expectations – always put a price in front of people and be flexible with the
pricing models you come up with. If the market is willing to pay less than what
you expect – you may need to change the cost to serve or increase the value Kalaari SaaS From Scratch:

delivered. Understand customer value creation (revenue or ROI for the Decoding Early Mentors Podcast
customer) – and charge a % of the value you have created. 22
 Saas Metrics

SaaS Quantity of Revenu

Quality of Revenu

Metrics
AND BENCHMARKS
Sales Efficienc
Potential of Future Revenu
Profitability
23
 SaaS Metrics

Quantity of Revenue
Revenue, especially for SaaS companies, can be a deceptive metric. SaaS companies can have a mix of services, recurring, and one-time
revenues that can be contracted, billed, or realised. To cut the noise from the clutter, focus on MRR.

Metric Notes B enchmark (if applicable)

MRR For a SaaS business, monthly recurring revenue is a much Last 5 Year Averages Seed: $0-50K
more valuable metric to track than traditional revenue. It’s MRR Series A: $50–200K MRR Series
the total revenue you received during the month that came B: $200-500K MRR
from recurring subscriptions. Important to track different
types of MRR –

Existing MRR Monthly revenue from your current users. (Baseline to grow -
from)

New MRR MRR generated by new customers. (Note: measure marketing Median

spends against New MRR) 70-60% of MRR (When MRR is <$250K)

50% of MRR (When MRR is >$1M)

Expansion MRR Additional MRR from existing customers. Median

~30% of MRR, when total MRR is ~$1-2M

L ost MRR L ost MRR from cancellations & downgrades. D etermines churn rate

C ontraction MRR L ost MRR from customers who downgraded. 30% of Lost MRR
24
 SaaS Metrics

Metric Notes Benchmark (if applicable)

Churned MRR Lost MRR from customers who canceled their subscriptions. 70% of Lost MRR

Re-activation MRR MRR generated by customers who come back to use the product. Median: 9-13% of MRR

ARR MRR x 12, will be different from the last 12 months of revenue. -

ARPA Average Revenue Per Account (MRR / # of Active Accounts) -

ACV Value of a customer's contract over a 12-month period. -

Customer Lifetime The average amount of money that your customers pay during their -
Value (LTV) engagement with your company. Indicates what your average
customer is worth. (ARPA x 1/Customer churn rate) An effective way
to calculate LTV is to analyse cohorts (12 months to 3/5 years)

Bookings Bookings represent the commitment of a customer to spend Important to track – Bookings to Revenue
money with your company. (Contract signed) Conversion (Time taken, drop-off rates)

Revenue Revenue happens when the service is actually provided. -

Billings Billings is when you actually collect your customers’ -

money. (Cash inflow) 25
 SaaS Metrics

Quality of Revenue
While the quantity of revenue is the most important metric to track, the quality of revenue determines the growth and sustainability of
future revenues. Key metrics, that indicate the quality of revenue, are linked to churn. High churn indicates you will not be able to
compound your revenue and your cost of acquisition will not be optimised.

Metric Notes Benchmark (if applicable)

Revenue Churn The rate at which monthly recurring revenue (MRR) is lost, as Last 5-Year Averages (MRR)

a result of lost customers and downgraded subscriptions. Seed: $0-50K 

[(Month 1 MRR - Month 2 MRR)/Month 1 MRR] 2 types of Series A: $50–200K MRR 

Revenue Churn (Net Churn & Gross Churn) Series B: $200-500K MRR

Gross Churn Takes into account the MRR lost via churn and contraction Unsustainable 10-15% 

from your existing customers. Post PMF Median <5% 

Best in class 1-2% 

For SMBs (10K ACVs) Target 30%

Net Churn Takes into account both the MRR lost (via churn & Post PMF Median 5.8% - 1% 

contraction) and gained (via expansion & reactivation) from Target Negative net churn
your existing subscriber base. As ARPA increases, the potential
for negative net churn increases.

Customer Churn The rate at which existing customers cancel subscriptions. 90-95% is common for enterprises,
Also known as logo churn. (Customers churned at period t/
Total customers at period t)
85% for mid-market, and 70-80% for
small businesses.
26
 SaaS Metrics

Metric Notes Benchmark (if applicable)

Net Revenue Retention Measures how much revenue is generated in each period Best in Class SMB: 100% NRR 

(Dollar Retention) relative to its original size. Dollar Retention takes expansion Mid-Market: 130% NRR 

revenue into account and can be greater than 100% if expansion Enterprise: 140% NRR
exceeds churned and contracted revenue.

Quick Ratio Revenue growth over a particular time period (i.e., New MRR + Best in Class Quick Ratio = 4
Expansion MRR) with revenue shrinkage over the same
timeframe (Churned MRR + Contraction MRR)

Customer Is growth being driven by a few big contracts or many small ones? On Average, the largest customer pays
Concentration <10% of the total MRR

Sales Efficiency
For growth to be effective and sustainable, it is crucial to examine sales efficiency. Uneconomic expenditure levels can always be used to
generate "fake" growth. The indicators listed below can be used to compare the value of new clients against the cost of obtaining them in
order to assess sales efficiency.

Metric Notes Benchmark (if applicable)

CAC Costs to acquire new customers. 
 Last 5 Year Averages Seed: $0-50K
(Sales & Marketing Spend / New Customers) 
 MRR Series A: $50–200K MRR Series
How to lower CAC? • Lower cost of leads • Increase funnel B: $200-500K MRR
conversion rates • Increase PPR • Reduce human touch •
Simplify lead time (sales to go live) 27
 SaaS Metrics

Metric Notes Benchmark (if applicable)

$ CAC Costs to acquire new $. 
 -

(Sales & Marketing Spend / New MRR)

LTV / CAC The lifetime value of your customers and the total amount Rule of Thumb LTV/CAC = 3-4x 

you spend to acquire them. Best in Class LTV/CAC > 5x

Measures the number of months it takes to generate enough Rule of Thumb Payback Period 

Payback Period revenue to cover the cost of acquiring a customer. (CAC / < 12 months 

MRR x GM) For early-stage companies, payback period is a Best in Class Payback Period 

better metric than LTV/CAC since LTV is difficult to determine < 5-7 months
accurately.

SaaS Magic # Net New ARR in a period divided by S&M expense from the Ideal: >1
prior period

Productivity Per Rep (New MRR for a specific / # of Sales Reps) PPR is impacted by 2 Best in Class 

(For outbound sales) factors: quality of people hired, also impacted by onboarding & 50% reps should be above 100% quota
training • Important to monitor PPR (time series), Monitor PPR by
each sales person

Sales The number of productive sales reps is a key driver of -

Capacity bookings. Planned revenue should be backed by sufficient
sales capacity. (# reps x weekly hours x weeks per year x %
hours spent on sales x % closing ratio of the team)

Revenue per lead The average amount of revenue each lead (as opposed to -
customer) will contribute. (New MRR / Number of Leads Per
Month)
28
 SaaS Metrics

Metric Notes Benchmark (if applicable)

ACV Value of a customer's contract over a 12-month period. -

SaaS sales funnel 
 The metrics that matter for each sales funnel vary from Link to SaaS Funnel Conversion
• Lead Generation 
 one company to the next depending on the steps Benchmarks by Industry & Channel
• Trials 
 involved in the funnel. Measuring conversion % at each
• Pilots 
 stage of the funnel can provide transparency to the
• Conversion 
 sales process. Early on, important to experiment with
• Onboard 
 the conversion of cohorts the by lead source - and then
• Retain 
 double down on the highest conversion
• Expand

Potential of Future Revenue

In addition to quantity & quality of revenue, below are a few metrics that indicate
a healthy pipeline of future revenue.

Metric Notes Benchmark (if applicable)

MoM Growth Medians by MRR Band

MRR Growth Growth is faster in the early stages. As companies mature, • MRR <$10K: ~70% 

the median growth rate slows down. • MRR $10-50K: ~40% 

• MRR <$50-100K: ~30% 

• MRR <$100-250K: ~25% 

• MRR <$250K-1M: ~20% 

• MRR >1M: ~18-15% 29
 SaaS Metrics

Metric Notes Benchmark (if applicable)

Rate of expansion [(Expansion MRR month-end – Expansion MRR month beg) / Best in Class 15-20% or +20% 

Expansion MRR month beg] Target 10-15%

Rate of won contracts Total opportunities won over the total opportunity won + lost -

Referral ROI Applies for companies that give referral incentives. To -

compare the amount we're spending on customer referrals
with the revenue those referrals will generate over their
lifetime. Measures $X in LTV for $Y in referrals. [(LTV -
Referral Incentive)/ Referral Incentive]

Contraction MRR Lost MRR from customers who downgraded. 30% of Lost MRR

DAU/ MAU The ratio of daily active users to monthly active users. Average 40% during non-holiday weekdays
(Defers based on the type of SaaS)

DAU/ WAU The ratio of daily active users to weekly active users Average 60% during non-holiday weekdays
(Defers based on the type of SaaS)

NP S Customer satisfaction is key to ensuring low churn. One way to The median NPS score for B2B
measure that is through customer surveys. The net promoter companies is 29
score (NPS) is the most popular metric for customer satisfaction.

CSat CSATs can provide a simple window into the type of service A good CSat score for B2B companies
you offer, and function as a valuable complement to NPS is +60%
measurements.
30
 SaaS Metrics

Profitability
Metrics and benchmarks of profitability in a SaaS business.

Metric Notes Benchmark (if applicable)

Gross Margin Gross Margin reflects a company’s margin after subtracting +75% is good, privately-held SaaS is
the cost of goods sold (COGS) from revenue. For SaaS 70-80%, below 70% is red flag 

companies, COGS typically consist of hosting costs, any data (Note: gross margins might vary if
or software needed for the product to operate, and the cost pass-through costs are high or if the
of frontline operations. SaaS is implementation or customer
success heavy)

EBITDA Margin Most important for mature SaaS companies. A useful metric TTM revenue growth rate + adj. The
to calculate Rule of 40 (Note: Rule of 40 is not a relevant EBITDA margin is 37%
metric for early-stage companies, only becomes important at
the pre-IPO stage – currently < 50% of publicly traded SaaS
companies hit the Rule of 40)

Gross Burn Rate Amount of money a company spends in a month. -

Net Burn Rate The amount the company loses in a month. (Gross Burn Rate Profitable companies have a negative
- Revenue) net burn rate

Zero Cash Date Predicted date your startup runs out of cash, as a result of -
your current burn rate, and assuming no new revenue
generation.

Burn Multiple Net Burn is divided by its Net New ARR in a given period. Best in class <1-1.5 | Target 1.5-2 31
 SaaS Founder Resources

SaaS
Founder
Resources
You’ll Want To Bookmark

Kalaari has a strong commitment to provide resources for founders. We wanted to democratise our knowledge by
sharing key resources for founders building in SaaS & other adjacent spaces.

We’ve sorted through some of the most popular SaaS resources and compiled a list of books, courses, podcasts, tools
and templates that will help SaaS founders stay at the top of the game.

32
 SaaS Founder Resources

Creating a Legal Entity Pitch Deck

Stripe Atlas entity formation, company structure, access to Shopify’s business plan Insights from Pitch Deck
startup service templat
Founder Resources –
AngelList Stack – entity formation and financial service Pitch Deck Hunt – Successful Dataroom templates (Pitch
SaaS pitch deck Deck, Financial Model)
NameVine – create a consistent online presence – instantly find
an available domain name with matching social media profiles Front Series A Lessons –
Seed/ Series A pitch deck
Firstbase – incorporation, operations, bank account, and other material
service
Doola – launch a LLC, corporation, or DAO from anywhere in the
world + bank account + ongoing state and IRS tax filing
Index of Cooley Go Docs – advisor and consultant agreement
templates, term sheet templates. Cooley’s Guidance section also
has useful information on common legal questions
Fundraising
Penn Law Startup Kit – templates and tutorials of legal Fundraising CRM + Database Overcoming founder
documents needed by early-stage founders Templat investor information
asymmetr
Mosaic Tech – SaaS Fundraise
Pitch Deck Tip Decoding termsheets
Questions Early Stage VCs

Recruiting & HR
May Ask You by Elizabeth Yin

The SaaS Org Chart – LinkedIn Recruiter – Jobs

template for SaaS company
hirin
search platfor
Rippling – HR softwar
Investor Update Templates
Cuvette – platform for hiring
interns + new grad Remote – Remote teams Investor Update Template from Journey.io – site for
Bloomberg Bet embedded content
Big.Jobs – Employment as a
Visible – site for investor updates
4 Service 4
33
 SaaS Founder Resources

Board Meetings Sales

The SaaS Board Meeting (and template) by David Sack Hunter – for cold email
Preparing a Board Deck by Bryan Schreie Frill – for customer feedbac
Managing Startup Boards by Mark Suster B2B Sales Tech Stack by Basis Set – suggestions on
effective sales tool
The Guide to Crushing Enterprise Sales by Sarah Nökel
(Investor at Northzone) – extensive list of resources for a

GTM number of company-building categories: marketing, growth,

fundraising, benchmarks, pitch deck & board update
templates
GTM Nirvana – deck by Caroline Clark (Founder of Arcade, User Onboarding – https://userlist.com/blog/saas-user-
formerly Sequoia & Atlassian). Breaks down buyer personas, onboarding/
acquisition channels, and pricing
Pricing Your SaaS Product – Lenny’s Newsletter – summary:
determine your value metric & personas. Includes a quantified
personas spreadsheet
Obviously Awesome: How to Nail Product Positioning so
Customers Get It, Buy It, Love It by April Dunford. Free online Pricing
templates here
Paddle – Payment processing platform for SaaS companies

Marketing
Holidays, events, and cultural dates calendar by Grace Clark Knowledge Building
Ortto – for automating communications with prospect Technically – demystifying technical topics by Justin Gag
Mailchimp – for transactional emails (2000 contacts on the Field Guides from Unusual Ventures
4 free plan) 344
 SaaS Founder Resources

Team building Communities

Equity Compensation Benchmarks & Resources
SaaSBooM r/SaaS community
Employee Equity Compensation Guide 2021 by Personal Capital. of Reddi
SaaS Inside
Includes descriptions of key terms (stock options, restricted
SaaS Club Podcast
shares, stock purchase plans, etc.) and mechanics of how they Relay by the
work Chargebee Tea Kalaari SaaS from
Scratch Podcast
Equity 101 by Carta. A series of digestible videos on equity grants, SaaST
vesting, exercising, and more SaaStitute
Indie Hackers
Understanding Startup Offers by Compound – more info on
startup equity compensation

The Ultimate Guide for Finding a Startup Job by Vinay Iyengar – a

concrete guide, mostly focused on more junior people less than 5
years out of college

Early-stage Marketing Compensation Explained by Kramer &

Kathleen of MKT1. Marketing-specific, but has good equity basics.

Onboarding
Onboarding Tactics for New Hires by First Round Review

Finance
SaaS Financial Plan Template – List of Financial Templates
By Christoph Janz (One of the for SaaS & Comparison – By
best free financial templates OpenV
for SaaS companies
Kalaari SaaS Metric
The SaaS CFO – Financial
Series A SaaS Metrics
4 Templates 35
4
 SaaS Founder Resources

APIs & Security

The Early-Stage Startup DevOps
Tech Stack List
Vant
Webflo Securefram
Postma Cloudflar
Bubbl Scru
Zapier Sprinto

Accounting & Legal &

Finance Insurance
Intuit Quickbook Vouc Analytics
Pilo Embroke
Strip Clerk Google Analytic
Neo.Tax Legalzoom Mixpane
Firebas
Metabas
Hotja
Amplitude
CapTable & Cloud Credits
Fundraising
AW
Clerk GC
Pulle Azur
DocSen Blueocean Collaboration &
Carta Productivity
Notio
Customer Discor

Design Service & CX Cod

Slac
Figm Zendes Asan
Canv Interco Airtabl
Zoom
4 Miro Drift
36
4
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About Kalaari

Kalaari Capital is an early-stage, technology-focused venture capital firm

based in Bengaluru, India. Since 2006, Kalaari has empowered visionary

entrepreneurs building unique solutions that reshape the way Indians live,

work, consume and transact. The firm’s ethos is to partner early with

founders and work with them to navigate the inevitable challenges of

fostering ideas into successful businesses. At its core, Kalaari believes in

building long-term relationships based on trust, transparency, authenticity,

and respect.

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 Thank You
For further information, please contact

VANI KOLA ANVITA KHOSLA KUMAR RITESH

vani_kola@kalaari.com anvita@kalaari.com ritesh@kalaari.com

Building something interesting in the SaaS space?

Reach out at saas@kalaari.com

The information herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. Although we endeavour to provide accurate and timely information, there
can be no guarantee that such information is accurate as of date it is received or that it will continue to
be accurate in the future. No one should act on such information without appropriate professional advice
after a thorough examination of the particular section.

© Kalaari Capital Advisors Private Limited, 2023