Dear SaaStr: How Much Cash Should a SaaS Company With $24m ARR Have on Hand?
At $24M ARR, aim for at least $12M in cash. The rule is to keep about 50% of ARR in cash after reaching initial scale ($3M-$4M ARR).
This allows for investing in growth, making hires, and avoiding underinvestment during crucial phases.
If growth is rapid—40%-50% or more—consider increasing to 60%-70% of ARR for flexibility in scaling and avoiding cash crunches when expanding successful strategies.
Lacking 50% of ARR in cash can slow investments in needed resources for scaling.
Estimate roughly:
- To grow from $24M to $48M ARR, 100 more hires might be needed.
- At $200,000 per full employee, that totals $20M required.
- While revenue comes from customers, a lacking balance sheet makes finances tight, leading to underhiring.
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