Jason M. Lemkin explains why $20 million in annual recurring revenue is the magic number for SaaS founders. At that scale with decent growth and low burn, private equity and other buyers start circling, viewing the company as a reliable annuity.
And there are other things that can come up. But here's the thing that has changed in SaaS. I don't again, if you can get to 20 million or more, and 20 million is the trip line for private equity. If you can get to 20 million or more with decent growth and modest burn, you will get offers to buy you. I will bet you dollars to donuts you will get offers. You will get cold calls from analysts at PE firms and others. And you may not want to do it, and you may not like love the terms. And you may be bought by something that's a little ossified or dated, but there is an army of capital whose job it is to buy these because they become annuities.
