Dear SaaStr: How Much Cash Should a SaaS Company With $24m ARR Have on Hand?
At $24M ARR, you should aim to have at least $12M in cash on hand. The general rule I follow is to keep about 50% of your ARR in cash once you’re past initial scale ($3M-$4M ARR).
This ensures you have enough to invest in growth, make accretive hires, and avoid underinvesting at a critical stage.
If you’re growing quickly—say 40%-50% or more—you might even want to push that number higher, closer to 60%-70% of ARR, to give yourself more room to experiment and scale without stress. The last thing you want is to hit a cash crunch when you’re trying to double down on what’s working.
You’ll see if you don’t have 50% of your ARR in cash on the balance sheet, you’ll slow down investing in people, systems and software you need to scale.
Just do the rough math in your head:
- At $24m ARR, to get to $48m ARR, you’ll probably need to make 100 more hires — roughly.
- At $200,000 per employee fully burdened, that’s $20m you’ll need right there.
- Now you have your incoming revenue from customers. But without enough on the balance sheet … it will be tight. And you’ll underhire.
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