Fresh Insights

Analyses, Musings & Observations

SaaS valuations look strong

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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Growth rounds are the new ‘exit’

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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Getting seed capital is harder than ever

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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The right level of dev spend

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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Why your startup should be on the coasts

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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Startup valuations are rising

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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Venture investing is getting harder

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.       New VC Funds.  The number of new VC funds in 2018 was roughly flat with 2017 and lower than the figure from 2014 to 2016.  256…
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VC favoritism on the coasts will increase in 2019

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.       Fund Size.  Fund sizes for non-coastal VC have increased slightly to $25mm, although this figure is in line with 2013.  Fund size on the coasts however…
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Venture capital data in 2018

We received  a presentation the NVCA made recently that reviewed the venture capital market in 2018.   It’s a great presentation and the NVCA is the authority: NVCA advocates for public policy that supports the American entrepreneurial ecosystem.  One of my favorite slides along with commentary is below:     VC fundraising.  Venture capital firms raised…
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The right level of founder ownership

Snapchat cofounders Evan Spiegel and Robert Murphy owned a combined 37% of Snapchat before it went public.  Mark Zuckerberg owned 21% of Facebook, Sergey Brin and Larry Page owned 31% of Google, and Reed Hastings owned 24% of NetFlix.  These are remarkable levels of CEO ownership upon going public/exit, but such high levels aren’t always…
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