I'm making the oversimplifying assumption that costs are fixed. In SaaS business, a disproportionate amount of the costs tend to be. Look at the SG&A line of

I'm making the oversimplifying assumption that costs are fixed. In SaaS business, a disproportionate amount of the costs tend to be. Look at the SG&A line of Qlik, in the news for their recent sale. [0] SG&A at mature companies can be 20-30% of revenue. At Qlik it's almost all of the revenue. This is ok, because they get the revenue over time. It's possible to create a more realistic model, but the core idea is "If you have a great company, it still can be ok to get VC money to grow it even faster." [0] https://www.google.com/finance?q=NASDAQ%3AQLIK&fstype=ii&ei=zHZRV7iiJuGqiQKLrblg https://www.google.com/finance?q=NASDAQ%3AQLIK&fstype=ii&ei=...