Courtesy of Salesforce’s monthly newsletter I came across this webinar entitled SaaS VC 101. It’s naturally got a Force.com angle to it but it’s got some points of interest for SaaS in general.

The webinar is presented by VC firm Emergence Capital who are 100% focused on SaaS and technology enabled services. They have $325 million under management and have invested in four companies distributing through Salesforce’s AppExchange.

Some of the characteristics they want in a good SaaS company:

• People who are service focused, goal driven and innovative.
• A business model that focuses on low friction for customers wanting to trial and setup and brings in subscription or transactional revenue.
• Operating metrics showing growth in net monthly recurring revenue, upsell and cross sell opportunities, and conversions from website visit to closed customer.
• Growing customer profitability. In the first year the customer acqusition cost will detract from initial subscription revenues but from year 2 onwards customer profitability should increase through upsell and cross sell.

For investment opportunities they look for:

• The opportunity to be a leader in a market
• Companies with domain experience in their market that understand the pain their customers face and how to fix it.
• Validated customer proposition and demonstrated adoption.

The webinar goes on to explain some of the benefits of using the Force.com platform. Emergence Capital will be investing $1 million as part of the Salesforce Million Dollar Challenge.

Key points. SaaS is growing and VC investment in SaaS is growing with it. And the most important part of SaaS is service.

Now if only I could get me some of that VC money…