About two years ago, I did a post with a chart from JMP that showed the correlation between the value of a SaaS business and its growth rate. Today, I’m back with a chart from RBC  that shows things haven’t changed.
The correlation here is pretty amazing. What’s even more amazing is that valuation is also closely correlated to customer acquisition cost (CAC) ratio .
Because of how RBC defines CAC, a low percentage above equates to a high customer acquisition cost. That is, 50% above means that the company is getting 50 cents of ARR growth for every $1 of S&M. Or, in my preferred form, the company is spending $2 for every $1 in new ARR.
Now, if I’m thinking correctly, if thing X and thing Y are each correlated to thing Z, then they are also correlated to each other, which implies that growth rate and CAC are themselves correlated. I suppose this makes sense because it’s more expensive to grow fast when you spend a lot on customer acquisition, therefore companies that grow more efficiently can also grow faster.
 RBC Analysis: The Economics of SaaS in Public Markets, April 2015.
 RBC defines the CAC upside down relative to the Kellblog CAC — i.e., the RBC definition is ARR growth / prior-quarter S&M expense.
(Cross-posted @ Kellblog)