About This Site
A practical resource for researching and investing in SaaS and web businesses.
What is Research & Investment?
This site provides practical frameworks and guides for evaluating and investing in digital businesses, with a focus on SaaS and web-based companies.
Whether you're considering acquiring your first online business or expanding a portfolio of digital assets, understanding how to properly evaluate opportunities is critical. The guides here draw from established best practices used by experienced investors and acquisition professionals.
Our content covers the key areas of business evaluation: understanding SaaS metrics, conducting thorough due diligence, applying appropriate valuation methods, and identifying potential risks before they become problems.
- Key SaaS Metrics: MRR, ARR, churn, LTV, CAC, and more explained
- Due Diligence Frameworks: Checklists for financial, technical, and operational review
- Valuation Methods: Revenue multiples, SDE, EBITDA approaches
- Red Flags: Warning signs to watch for in potential acquisitions
- Business Model Analysis: Considerations for different digital business types
Our Approach
Principles that guide our content and recommendations.
Data-Driven
Focus on measurable metrics and verifiable data rather than assumptions or hype.
Practical
Actionable frameworks you can apply immediately, not theoretical concepts.
Risk-Aware
Emphasis on identifying and understanding risks, not just opportunities.
Frequently Asked Questions
What makes a good SaaS investment?
A good SaaS investment typically features strong recurring revenue (MRR/ARR), low churn rates (under 5% monthly for SMB, under 2% for enterprise), healthy LTV:CAC ratios (3:1 or better), a growing customer base, and a defensible market position. The best opportunities combine strong fundamentals with clear growth potential.
How are SaaS businesses typically valued?
SaaS businesses are typically valued using revenue multiples (2-10x ARR depending on growth rate, profitability, and market conditions) or earnings multiples (SDE or EBITDA, typically 3-5x for smaller businesses). High-growth SaaS companies command premium multiples, while slower-growth or declining businesses trade at lower multiples.
What is a healthy churn rate?
A healthy monthly churn rate for SaaS is typically under 5% for SMB-focused products and under 2% for enterprise products. In annual terms, churn under 10% is generally considered acceptable. However, the best SaaS businesses achieve negative net revenue retention, meaning expansion from existing customers exceeds losses from churn.
How do I evaluate technical risk?
Technical risk evaluation involves reviewing code quality and documentation, assessing technical debt levels, checking security practices and vulnerabilities, reviewing third-party dependencies and APIs, and understanding the scalability of the current architecture. Consider hiring a technical advisor for complex codebases.
What's the difference between LTV and CAC?
LTV (Lifetime Value) is the total revenue you can expect from a customer over their entire relationship with your business. CAC (Customer Acquisition Cost) is the cost to acquire that customer. The LTV:CAC ratio tells you whether your business model is sustainable - a ratio of 3:1 or higher is generally considered healthy.
Should I invest in growing or profitable businesses?
This depends on your goals and expertise. Growing businesses may offer higher returns but require more capital and operational effort. Profitable, stable businesses generate immediate cash flow with less risk. Many investors start with smaller, profitable businesses to learn the ropes before pursuing growth-stage acquisitions.
Ready to Dive Deeper?
Explore our comprehensive guides on metrics, due diligence, and valuation frameworks.