Fresh Insights

Analyses, Musings & Observations

Your target ACV – $25k

Average Contract Value is important, but don’t obsess over it.  Maximizing ACV shouldn’t be the goal and as you’ll see below, SaaS companies that do exit had a modest median ACV of $24k.  A few observations:   Bigger software companies have smaller ACV’s.  Below is a data set of 69 publicly traded SaaS companies and…
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12 commandments of customer success

We’ve had the good fortune of learning from and investing in SaaS businesses with excellent customer retention and upsells. Below are some of the key learnings we’ve gathered over time.   The Customer Success Team is not the only group in charge of customer success.  Preventing churn is everybody’s job, so your engineers should talk…
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Unprofitable is ok

I cringe writing that title because we’re sticklers for cash efficiency and achieving cash break even. However, we looked at 111 tech companies at IPO: 82 of them were not profitable (74%) and 71 were not generating positive cash flow (64%).  The data and additional observations are below.       Ecommerce, Hardware, and Gaming…
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Lessons from a successful blockchain exit

We had the chance to speak to Bennett Collen of Cognate.  Bennett had a successful exit to GoDaddy.  Lessons from his story are below.   Cognate found a niche with a deep need.  In 2014, Bennett started Cognate within his dad’s law firm.  Bennett’s dad is a trademark attorney and the problem Bennett saw firsthand…
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Net vs gross dollar retention stats

Dollar retention is the most important measure in SaaS.  There are two ways to measure it: gross dollar retention and net dollar retention.  Gross dollar retention looks at how much of the customer base you’ve kept year over year without including upgrades.  Formulaicly, it’s ARR – downgrades – churn all divided by beginning ARR and…
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The early exit of Zcruit

We had the chance to speak to Ben Weiss, founder and CEO of Zcruit.  Zcruit was acquired by Reigning Champs in November 2017.  Ben shared his story with us and lessons from his journey are below.   What is Zcruit? Zcruit helps colleges sports teams access information on recruits.  Ben started working for the Northwestern football…
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Venture capital trends – the data

We just received Dow Jones VC Edge report for Q1 2019.  The data is excellent and shows the data behind trends in venture capital.  What are the trends? i) the market has never been more awash with venture capital; but ii) the number of deals being done isn’t growing at the same rate.  As a…
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net dollar retention needs to be 109%+

One SaaS metric we monitor closely is net dollar retention.  It measures what percent of revenue 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 yields a number greater…
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Learnings from the acqui-hire of a travel startup

We had the chance to speak with Eric Shepard, formerly of Trill Travel.  Trill had a successful acqui-hire exit to Lonely Planet.  Eric shared his story with us; lessons from his experience are below.   What was TRILL? TRILL is an artificial intelligence-driven travel marketplace that turns Instagram posts into bookable experiences. TRILL’s dual-sided marketplace gives content creators…
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The aftermath of raising too much cash

At the link below is one of the best startup post-mortems I’ve ever read.  It’s by a founder of a company called Moz.  The business had fantastic growth out of the gate, took on major VC money, tried to scale too quickly letting hiring and costs got ahead of growth, and ultimately they had to…
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