Last week we met with a SaaS business that in our view is doing literally everything right. Below some of my notes which I think any software executive will find helpful. Customer Success. At this company, customer success reps are specialized by industry so that they can speak the customer’s language and develop some…
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When you finally exit or IPO, will you be the CEO or will someone else be running the company? It’s a great question so we dug into 105 IPO’s to figure it out. Specifically, we looked at the CEO at the time of IPO/exit and compared it to the list of key founders to determine…
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What valuations are founders asking for when they raise their Series A? Since May 2018, we’ve had conversations with 275 companies about their Series A rounds. Below is aggregate data on these 275 raises with names redacted to preserve confidentiality. Figures like revenue, valuation, and round size are medians from conversations with founders. Remember the…
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We follow 59 publicly traded consumer tech companies (B2C) in industries like social media, marketplaces, subscription, and ecommerce. Given the diversity of industries, the multiples vary (enterprise value/revenue). Below is the data along with a few observations. Social media’s slide has paused. The median revenue multiple is now 7.8x, up from 6.5x in…
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SaaS multiples look steady: of the 82 SaaS companies we follow, the average public SaaS business is trading at 10.03x revenue while the median is 7.72x. Interestingly, the gap between the average and median has never been larger for the time period shown, meaning more attractive SaaS companies are being rewarded with big premiums. The…
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PwC and CB Insights put out their annual report on venture capital and it’s fantastic. One of the slides buried way in the back discusses M&A of venture backed companies. The insights are valuable so we’re posting the slide below. In any given year for the past 5 years, 600 to 650…
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PwC and CB Insights put out their annual report on venture capital and it’s fantastic. A few trends jump out that are remarkable, with big implications for founders now and VC in the future. Venture funding up, deals down. Checks to startups are getting bigger, but they’re going to fewer companies. The table below…
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We looked at the R&D spend of tech companies at IPO and in prior years (usually Series B to D rounds) to answer the question ‘what is the right level of spend on R&D’. The data is below and varies by industry. SaaS. Leading up to the IPO, SaaS companies spent on median…
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As much as I hate to say it, unfortunately the Midwest and South are as overlooked as ever by venture capital. We received a great presentation from the NVCA that reviewed the venture capital market in 2018. The slide below shows the trend of investing on the coasts is getting even stronger. The NVCA…
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We received a great presentation from the NVCA that reviewed the venture capital market in 2018. One of my favorite slides along with commentary is below. Valuations have risen significantly. The median valuation of Series A deals has doubled since 2013 to $20mm and was up sharply from 2017. Series B valuations…
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