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Covenants force realistic projections

76 out of 93 public tech companies don't have a strategic

47 IPO's that were burning cash raised 5.3 years of burn

206 transactions in Q1 with median revenue multiple of 4.2x

vertically-focused public SaaS was trading at 6.8x revenue compared to 3.8x for horizontal SaaS 

The good ones help you for free

of 92 public companies, the median founder ownership at IPO was 11%

100% is near the median, but 125%+ is top 5

23% of SaaS company revenue comes from one-time/services

VC raised $42bln in 2016, a 10 year record

they generate $12.58 of lifetime revenue for every $1.00 of equity invested

Analysis of 43 public SaaS companies

Also median raise is $2mm, growth is 100%, and burn is -$57k

Let the sales team travel, pay well, and ONBOARD!

It's not worth the equity you have to give up

~10x ARR has been a consistent trend over the past 3 quarters

Social Media, Marketplaces, Content Distribution, and SaaS had median EBITDA margins of 12%, 12%, 3%, and -8%

For Series A, every $500k of fresh capital will result in 3% to 7% dilution

Lots of cash, low debt, strong cash flow

SaaS revenue is great, but profitability is better

In one word: transparency

Public SaaS companies generate 23% of revenue from non-recurring sources

The Series A is the hardest round to raise, and notes/SAFE's only make it harder

The median of 52 publicly traded tech companies is $288k, at exit

Series A companies with median MRR of $70k are asking for 9.6x ARR

Strive for generating $0.55+ of new recurring revenue for each dollar of Sales & Marketing spend

Cash efficiency and margins matter for valuation

And build a product, not just a technology, to prevent an acqui-hire

Excerpts from a fantastic book about Gilt Groupe called By Invitation Only

Public Markets punish underperformance; the average annual return of 24 poorly performing tech co's is -21% 

At a minimum, expect to spend 1/4th of revenue on ongoing development

So make sure you're properly commissioning your CS team and AE's

At IPO, 27 tech companies raised on median 4.4 years of burn

Good SaaS companies have net retention of 110%+.  Contact is the key.  

Stop trying to rip off the customer, and instead justify the price

Of the 47 IPO's we looked at, median CEO ownership was 8.1% and average was 13.8%

We look at 47 publicly traded companies to prove it

and other wisdom from a book called Hire Right, Higher Profits

Bluum.com wasn't the biggest, but now they're the winner

At 4.94x, Q1 2016 showed big improvement from last quarter

The median is 59% for VC and 7.6% for CEOs.

The best public companies reinvest profits

It's not if you get sued, it's how efficiently you make the suit go away

Raising half as much results in 121% more founder ownership

Once you're bigger and profitable, then you can branch out into other features

There's only one Elon Musk, and you're not him

Do it on day one and keep doing it in small increments as part of comp

It may impact valuation, but it won't impact total capital deployed by VC

If you're significnalty above 25% as a percent of revenue, you better be materially improving the product

Key metrics behind those bookings are also critical

Insights from guys who do M&A everyday  

Public SaaS companies have on median only $7mm of debt 

It's one of the most important hires you'll ever make

What the docs say and what can realistically be done are two different things

Focus on being the most innovative, not the first or even the biggest

Meaning visit a lot of dealerships and don't let them rush you

The acquirer is not your friend, remember that

SF was immune from the re-pricing, but maybe not anymore

You won't get a big valuation bump, but it's fast money

LTV/CAC is dead.  Content marketing, SEO, in-house PR are superior

We answer the question 'how much revenue should capital generate'

Get close to potential buyers early, and they'll pay you for it

Startups are getting less aggressive on the ask

because you never know what someone will pay.

Say no to an acquirer, and they likely won't come back

Interview the VC as much as they interview you

Frankly, this is why we focus on Series A, not seed deals

The punchline: net retention needs to be 100%+

It shouldn't change the way you run your business

A rough analysis of cash equity needed to take a SaaS business public

Investors are not mushrooms: do not keep them in the dark and feed them shit

Key excerpts about startups, VC, and the craziness that was the dot com bubble

MRR is great, but so is one-time revenue

but don't fire the sales rep doing 3x

Key excerpts from a great book about selling to the enterprise.

This is a book review of a phenomenal book called Sales Reps are Free.

Capital to grow is great, but know that it comes with strings.  

A lack of capital in Canada forces companies there to build real businesses.

Key metrics and targets to keep in mind for using your cash to grow a business, not a bonfire.  

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