Fresh Insights

Analyses, Musings & Observations

SaaS valuations made a comeback

SaaS multiples look great and made a nice comeback from Q4 2018: of the 72 SaaS companies we follow, the average public SaaS business is trading at 10.51x revenue while the median is 8.94x.  Interestingly, the gap between the average and median has never been larger for the time period shown, meaning more attractive SaaS…
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Tell your investors everything

If you’re not communicating with your investors regularly (at least monthly), you should be.  Here’s why:   The more info you share, the fewer questions you’ll answer.  I can attest to this personally.  At BSV we have a lot of investors and one thing I feared was getting weekly sets of random questions from all…
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A great VC story

eBoys by Randall Stross is a classic. It chronicles the early days of one of the finest venture funds ever: Benchmark. Below are some of the excerpts I found most valuable.     “When Benchmark invested $6.7mm in eBay in 1997, the auction company’s valuation was put at $20 million.  By the next spring, the…
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SMB is a hard road in SaaS

We’ve always believed there is a valuation discount for SaaS businesses that focus exclusively on SMB customers.  To see if this is true, we compared publicly traded SaaS companies that focus on SMB customers to those that focus on enterprise customers.  Specifically, we wanted to see if SaaS companies with an SMB customer base trade…
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Don’t forget about one-time revenue

Everyone loves recurring revenue and rightly so: it’s far more valuable than one-time revenue to VC and acquirers.  But, don’t forsake one-time revenue.  Whether it’s for services, onboarding, licensing, or some other one-time event, revenue of this type is incredibly valuable especially at early stages.   There are three big reasons it’s valuable:   It’s a…
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hiring SaaS sales reps

We had a good conversation with one of our SaaS companies where we discussed sales rep efficiency.  The Company has two seasoned reps which are generating a respectable 2.6x and 3.2x as much bookings as we pay them.  In other words, if we are paying the reps $100k all-in (includes base, commission, bonus, and benefits),…
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VC don’t know about your business

One question I get from entrepreneurs frequently is “so what value are you going to add?” It’s a fair question that should be asked of every VC, and my answer every time is “none”.  Don’t get me wrong, I sit on multiple boards and I think every one of the CEO’s of those companies would…
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Bad advice from VC

Yesterday I was on a startup panel with other VC and I heard so much bad advice, I feel compelled to call it out.  Below are some of the things VC do and say that is just wrong.   “Don’t take the first offer you get.” While true, this is a very misleading statement to…
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Stay open to M&A solicitations

When a big strategic inquires about purchasing your company, seriously entertain the offer.  If you don’t, the outcome could  be similar to the story I’m about to share with you.   We’ve been watching a company for a while that had some fantastic technology.  The tech was so good that the likes of Salesforce, Oracle,…
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Selling to enterprise customers

I recently re-read “Hope is not a Strategy – The 6 Keys to Winning the Complex Sale” by Rick page.  The book is fantastic and while below are some excerpts which I found valuable.   “The shrinking half life of technology means the window of competitive advantage for products is getting narrower.  In today’s high…
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