Floor Investment Criteria: The Venture-Style SaaS Bet

Floor investments are fundamentally different from traditional SaaS investments. They are venture-style bets on viral growth, network effects, and adjacent monetization — not sales-driven recurring revenue businesses.

Must-Have Criteria (All Required)

• Viral coefficient k > 1 — Product must spread through usage, not marketing spend. If growth requires paid acquisition, Floor model breaks.
• CAC < $50 (ideally near zero) — Floor economics require near-zero CAC because LTV is low. Organic and viral channels must dominate.
• Time to value < 5 minutes — Users must experience core value immediately. Long onboarding kills Floor products.
• AI-native architecture — Built on AI from foundation, not bolted onto legacy architecture.
• Team of < 15 at profitability — Floor businesses must be capital efficient because they cannot charge premium prices.
• Network effects or data flywheel — Without integration lock-in, Floor companies need another structural moat.

Positive Signals

• Organic traffic > 80% of signups
• D7 retention > 40%
• Founder has shipped 3+ products before
• Clear adjacent monetization paths
• Growing user-generated content or community

Valuation Framework

• Seed: $5-15M pre-money
• Series A: 15-30x ARR equivalent
• Exit: Acqui-hire ($20-50M) or scale to $1B+
• Target return: 50-100x or zero — binary outcomes

This is part of a comprehensive analysis. Read the full analysis on The Business Engineer.