Fresh Insights

Analyses, Musings & Observations

Growing a greenfield market

One of our companies had a sales consultant audit their sales team and methodology.  Our portfolio company’s market has some interesting traits: i) the market is greenfield and almost all homegrown; ii) ‘no decision’ is the company’s primary competitor; and iii) the market as it stands is currently small, but large enterprises are the target…
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SaaS Valuation Report

SaaS multiples are higher than they’ve been since we’ve tracked the data (Q4 2014): of the 73 SaaS companies we follow, the average public SaaS business is trading at 11.69x revenue while the median is 9.08x.  Interestingly, the gap between the average and median has never been larger for the time period shown (2.6x), meaning…
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Restructuring a startup

In any VC portfolio there are going to be companies that need to restructure or pivot.  We just had that situation arise for one of our portfolio companies: after raising $9mm+ and a few years of hard work, the team built an incredible technology but couldn’t build a profitable company around that technology.  Below are…
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Shop your VC

If you’re only talking to us about raising money (Blossom Street Ventures), then you’re doing yourself a disservice.  There’s a few things you should absolutely do when raising money:   Shop around.  Make sure and talk to as many VC funds as time allows.  You’re not only looking for a personality fit, you’re looking for…
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SaaS Multiples and M&A

We recently got Software Equity Group’s SaaS M&A Snapshot for Q1 2019.  SEG is an investment bank focused SaaS companies and they put out fantastic data on what they’re seeing in the market.  Key observations from their latest report are as follows:   Deal volume is still high.  There were 277 M&A transactions in SaaS,…
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Pitfalls of tech M&A

We just watched a company go through a very intense, distressed M&A process that fell apart in the final hour.  I want to share some of the hurdles that came up so that when you’re ready to sell, you’ll be prepared:   Protect your team from getting poached.  An acquirer is about to learn a…
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The most important B2C metric

Lifetime Value to Customer Acquisition Cost, or LTV/CAC, is the critical metric to watch for most B2C companies. Generally it’s thought that this figure needs to be north of 3x, meaning the customer is worth three times what he/she costs to acquire. Data from publicly traded companies is notoriously hard to find and indeed we…
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Over-rated: speed to market and market size

The two most over-rated factors in startups are market size and speed of expansion.  Too much emphasis on these factors could put your business at unnecessary risk and dramatically increase the chance of failure.  I’ll address each separately below.   Yesterday I had a founder whose business was in the wedding industry lament to me…
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Don’t say no to M&A

One of our companies will be visiting with a potential acquirer about what an acquisition might look like.  Even though the company is not for sale and hasn’t hired an investment bank, we’ve encouraged our portfolio company to take the meeting for a number of reasons.   Rarely do you get to choose when you…
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The Series A Valuation Report

What valuations are founders asking for when they raise their Series A? Since May 2018, we’ve had conversations with 329 companies about their Series A rounds.  Below is aggregate data on these raises with names redacted to preserve confidentiality.  Figures like revenue, valuation, and round size are medians from conversations with founders.  Remember the valuations…
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