Observations, Analyses, Musings

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Spotify vs Pandora is the latest case study

the median is $275k

SDR's need to make 6+ attempts before giving up on a prospect

Part of Trish Bertuzzi's book

The median ACV is $27,499

sales/R&D/G&A should be 40%/20%/20%

According to the IPO's of 31 SaaS companies

VC raised only $135bln but deployed $238bln

revenue multiples are 6.91x on median

Consistent growth yoy is jsut as critical

IRR of 123 tech co's since IPO is 17%

15% is the median and 21% is the average

only 16 of 97 IPO's had one

Bridge Group's survey of 355 companies

Survey of 384 B2B SaaS companies

The median of tech co's at IPO is $265k

all you need is 1 paragraph

Holding steady at 4.5x TTM revenue

Avg deal size is also down to $118mm from $156mm

VC Deployed: $215bln. VC Raised: $129bln since Q3 2014

The 4 fatal flaws of our first zero

They haven't been this high since before 2008

$265k is the median salary, but the best take $1 annually

4.6x is the median SaaS revenue multiple, but 6x+ happens 29% of the time

Median revenue multiple is 6.80x

45 out of 72 SaaS companies generate negative EBITDA

$50k retainer with 5% placement fee is the norm

Public SaaS co's hold at least 4 years of cash

44% of the most succesful tech co's are in CA

Advice from an investment banker on selling out

Revenue multiples are at 6x, growth is at 26%, and margin is -7%

$273mm in median revenue, 27% growth, $0.54 of new revenue per $1 of S&M spend

Net Retention of 99% is the median, but strive for 112%+

Interviews of founders from their early days

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

$14,449 is the median of 37 SaaS businesses at exit 

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

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

Median is 11%.  Average is 17%.

Best practices for SaaS CS

~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 median CEO ownership at IPO is 7.6%

The best public companies reinvest profits

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

The decision arguably saved PayPal

Raising half as much results in 121% more founder ownership

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

Take 24+ months if you can get it

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

Vinod Khosla was right

The title says it all.

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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