Bessemer's Efficiency Score vs Cash Conversion Score

Bessemer's Efficiency Score and Cash Conversion Score both measure capital efficiency for SaaS companies, but they focus on different aspects of financial performance. BVP's Efficiency Score calculates the ratio of ARR growth rate to net burn rate (ARR Growth % ÷ Net Burn Rate as % of ARR), evaluating how efficiently a company uses cash to generate revenue growth. Cash Conversion Score, developed by Bessemer Venture Partners, measures the ratio of gross profit to customer acquisition cost (Gross Profit ÷ CAC), indicating how quickly a company can recover its acquisition costs through the gross profits generated by new customers.

A SaaS startup seeking its Series B funding might use BVP's Efficiency Score when presenting to investors concerned about sustainable growth and capital efficiency in the current market, as it demonstrates the company's ability to grow revenue relative to cash burn. On the other hand, that same company might leverage the Cash Conversion Score when analyzing sales and marketing effectiveness or optimizing go-to-market strategies, as it reveals whether customer acquisition costs are justified by the resulting customer profitability. Companies with longer sales cycles might find the Cash Conversion Score particularly valuable as it helps determine if expensive enterprise sales efforts will ultimately pay off through higher lifetime customer value.