Valuations for SaaS are higher than they’ve ever been since we started keeping track of the data in Q4 2014: of the 77 SaaS companies we follow, the average public SaaS business is trading at 10.07x revenue while the median is 9.32x. The data is below. Negative EBITDA, positive cash flow. The median SaaS business had…
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This happens. Occasionally you and your investors/VC won’t see eye to eye, or worse yet, you’re sideways with your VC and the relationship is acrimonious or hostile. While I’ve never had a hostile relationship with a founder, certainly there are times where we’ve been in disagreement on major issues or a founder isn’t happy with…
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There’s a compelling reason to keep burn down and be cash efficient: it limits founder dilution. The less money you raise, the less dilution founders absorb, but what many founders don’t realize is that the relationship is not linear. In other words, being cash efficient has a compounding effect on limiting founder dilution: in a…
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Many young company goes through it: at some point you may have to lay off a chunk of your team to reduce burn. Group layoffs at a startup are particularly challenging because the team is presumably small (less than 30 people), everyone works in the same office, and since group layoffs are generally not performance…
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Recently one of our companies had a sales consultant do an audit of its sales team and methodology. Our portfolio company’s market has some interesting traits: i) the market is greenfield and almost all homegrown; ii) ‘no decision’ is the company’s primary competitor; and iii) the market as it stands is currently small, with large enterprises being the target customers. The…
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Venture backed companies like Uber, WeWork, and Spotify, are unprofitable. Is this the norm or just a trend for the more recent vintage of high flying companies? To answer that question, we took a look at the operating income and free cash flow of 92 tech companies at the time they went public going as…
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A good friend of mine named Joe Shiraz is taking his company, ServiceBot, through an accelerator based in Memphis called Launch Delta. Launch Delta was created by Start Co in partnership with ServiceMaster, one of the largest home services companies in the nation. Launch Delta is focused on home services startup, Joe’s company ServiceBot is…
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One of our portfolio companies is exploring a sale, so we’re talking to investment bankers. Below are some of the interesting insights from those conversations: You’re not the only one who wants to exit. One banker stated “Google sees upwards of 2,500 companies a year they could potentially acquire.” Another mentioned “Adobe receives dozens of companies…
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We talk to a lot of companies that have an unhealthy focus with being the first to market. There is a belief that if you’re not the first and biggest in a market right away, you won’t be successful. We hear too many companies say things like “this market is a land grab” or “we’re…
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