I'm curious what the general appetite from search fund LPs is for software companies still in the cash-burning stage. More specifically, growing SaaS companies generating between $3-10 million of recurring revenue typically do not have enough top-line to cover their larger expense base, mainly due to the nature of the subscription business model where R&D and S&M costs are high in the early years. As customer lifetime matures, however, they become highly profitable if retention and gross margins are high.

With this in mind, are there search fund LPs open to funding cash burning SaaS businesses that have strong unit economics, modest growth, and a clear path to profitability? I usually see LPs mandating profitability as an investment criteria, but it just doesn't seem to make sense for cloud-based software companies that generally don't become profitable organically until $15 million+ of recurring revenue.

Would be great to hear if anyone has more insight here, or has experience searching for SaaS companies in general.