In early-stage SaaS, a rule of thumb I've often heard is that it's great if you're maintaining a 1:1 ratio of cash burned to ARR generated. So if you net burn

In early-stage SaaS, a rule of thumb I've often heard is that it's great if you're maintaining a 1:1 ratio of cash burned to ARR generated. So if you net burn $6M cash from Day 1 to now, and get to =>$6M ARR, you're doing great. Presumably that ARR has an LTV(lifetime value) that's some multiple of ARR. But in early-stage, that "net burn of cash" figure includes both client acquisition costs, COGS, and initial R&D costs. So it's a pretty messy metric IMO beyond a back-of-the-napkin kind of thing. Almost immediately you'd expect to focus on the king of the "classic" SaaS metrics - CAC:LTV, where LTV takes into account gross margin, and making sure you're above the 3x line. Investing big $ in R&D for product expansion/improvement etc is almost a different question - it's its own ROI calculation. Final point - in SaaS, the pay-back on the initial CAC cash outlay is also super important. If it's tight (good), you are "re-cycling" the initial CAC spend on add'l clients, and each is creating a stream of future cash flows. In a perfect world, you're taking $100 of investor money, deploying it into CAC to produce x # new clients, which represents ARR streams, and who pay back the $100 CAC almost immediately. Then you re-deploy the $100 to get the next x # of new clients, etc. This is the magic of compounding in SaaS. -- All this to say - capital efficiency should be understood in context (in my examples above, capital efficiency in go to market has it's own rules and dynamics, whereas other uses of capital may be different).