Fresh Insights

Analyses, Musings & Observations

Measuring customer health in SaaS

In software, there are a few ways to measure the health of the customer base and stickiness of the product.  Zuora does a nice job of showing four measures of customer health in their S1.   Processed Transaction Volume   Zuora’s first measure of the overall health of the business is processed transaction volume.  According…
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First to market means nothing

There are countless examples of ‘first to market’ not being a sustainable competitive advantage.  Comparing the 2018 public offering of Spotify to Pandora’s original IPO in 2011 is the latest major example.  Below are some excerpts from Pandora’s S1 (official IPO document filed with the SEC) that show its dominance at the time:   Pandora…
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How much SaaS revenue your marketing spend should generate

One of our SaaS portfolio companies recently shared their favorite metric to measure sales & marketing efficiency.  Specifically, they look at new revenue booked over a given time period divided by sales & marketing spend during that period (New Rev/S&M).  It’s one of many ways to measure sales & marketing efficiency, but it may be…
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How to build pipeline – part 4

I read Trish Bertuzzi’s book ‘The Sales Development Playbook’ and it was by far one of the best sales books I’ve read in a while.  The book focuses heavily on building pipeline with SDR teams.  This is the second post of a few I’m going to share about this book: there was so much good…
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How to build pipeline – part 2

I read Trish Bertuzzi’s book ‘The Sales Development Playbook’ and it was by far one of the best sales books I’ve read in a while.  The book focuses heavily on building pipeline with SDR teams.  This is the second post of a few I’m going to share about this book: there was so much good…
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Net dollar retention of ~107% will take you public

One SaaS metric we monitor closely is net dollar retention.  It tells you what percent of revenue from current customers you retained from the prior year, after accounting for upgrades, downgrades, and churn.  Formulaically it’s beginning of period revenue + upgrades – downgrades – churn all divided by beginning of period revenue.   If that formula…
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How to build pipeline – part 2

I read Trish Bertuzzi’s book ‘The Sales Development Playbook’ and it was by far one of the best sales books I’ve read in a while.  The book focuses heavily on building pipeline with SDR teams.  This is the second post of a few I’m going to share about this book: there was so much good…
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The Series A Valuation Report

What valuations are founders asking for when they raise their Series A round? Since May 2018, we’ve had conversations with 179 companies about leading or following their Series A rounds.  Below is aggregate data on these 179 raises with names redacted to preserve confidentiality.  Figures like revenue, valuation, and round size are medians from conversations…
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Consumer tech valuations are down

We follow 60 publicly traded consumer tech companies in industries like social media, marketplaces, content distribution, gaming, ecommerce, payments, and new hardware.  Consumers and tech are a critical in the business model. Given the diversity of industries, the multiples vary.  Below is the data along with a few observations.     Social media has been…
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SaaS valuations are unshakable

Even as stocks sell off, SaaS valuation remain unshakeable.: of the 76 SaaS companies we follow, the average public SaaS business is trading at 8.91x revenue while the median is 8.29x. The medians and averages are nearly unchanged from July when we last presented the data, which is pretty incredible given the recent stock market…
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