hipster coffee shop Budapest often looks the same as if you were in Portland, Oregon or São Paulo, Brazil. This is one of the effects of globalization, with several trends becoming ubiquitous. But if you look closely, you'll soon find that what looks the same actually has a different flavor.
Let's take SaaS as an example. No matter where you are, buying software in boxes is a thing of the past. However, the SaaS businesses that are enabling this change are dealing with a different set of rules depending on where they are based, leading to a fork in the road.
This is also true in India, where SaaS is on the rise tremendously. According to a report by Bessemer Venture Partners, the local SaaS market could reach $50 billion in annual recurring revenue by 2030. But the company also points out that his SaaS business in India is different from its U.S. peers. The former is more efficient, which could “help the path to global leadership.”
The “State of SaaS LatAm 2024” report suggests that this may also apply to other emerging countries.
The report, published in collaboration with SaaSholic, a blog-turned-VC firm, finds that many SaaS businesses in Latin America outperform their peers on efficiency metrics such as net dollar retention and customer acquisition cost recovery. It shows. But while AI has the potential to change that, a lack of capital also limits innovation.
Forced efficiency
Customer acquisition cost (CAC) is an important data point for SaaS startups. This is the basis for her two other important indicators. CAC payback (the time it takes for a customer to “pay back” the acquisition cost) and LTV/CAC ratio (LTV is the lifetime value a company earns from a particular customer).