Recently, we got a hold of an investor letter from one of New York’s finest late stage venture funds. The letter shared insights into what the fund looks for in a management team, which resonated with us. Below we share these points, verbatim. We like CEOs that are patient with us and believe that all…
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At some point you may have to lay off a chunk of your team to reduce burn, especially now. Large layoffs at a startup are particularly challenging because the team is small, everyone works in the same office or at least closely, and the impact to the culture can be dramatic. Additionally since group layoffs…
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We just watched a company go through a very intense, distressed M&A process that fell apart in the final hour. It was an acqui-hire which has its own nuances relative to traditional M&A. Below are some tips to pulling off your own acqui-hire should it come to that. Protect your team from getting poached. An…
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Below are revenue multiples for publicly traded consumer tech companies (B2C). Industries and therefore multiples vary widely. If you’re looking for data on SaaS multiples, that blog came out a week ago. Social media trades at 6.1x. Multiples rose steadily through 2020 peaking at 22.7x on median in Q1 2021. YOY growth in the…
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From time to time, we’ll share our views of what we’re seeing in the market for software venture capital. Below is the latest. The bid-ask spread is very wide. The “bid-ask” is as wide as we’ve ever seen it. The bid is what venture funds are willing to pay for equity in a company and…
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From time to time, we’ll share our views of what we’re seeing in the market for software venture capital. Below is the latest. The bid-ask spread is very wide. The “bid-ask” is as wide as we’ve ever seen it. The bid is what venture funds are willing to pay for equity in a company and…
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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 company was…
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Right now there is an extreme focus on profitability in SaaS, but perhaps we’re overdoing it. The real focus should be on cash efficient growth. Cash efficient SaaS companies that retain the customer scale really nicely and build a lot of value. The math below shows good SaaS gets more cash efficient over time (beware,…
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It’s ok and even desirable to be unprofitable when you’re adding revenue at an acceptable cost and you’ve got 100%+ net dollar retention, meaning you never lose the customer and actually grow them over time. In order to measure the acceptable cost of new SaaS revenue, we look at new revenue vs operating loss, and…
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We keep close track of every SaaS IPO in the past five years (since MongoDB in October 2017). Those 64 companies have all now issued their Q3 2022 earnings. Below we summarize key financials and metrics. Median quarterly revenue of $118mm. Median and average revenue of the 64 companies was $118mm and $189mm respectively. Annualized,…
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