Fresh Insights

Analyses, Musings & Observations

Net dollar retention of 73 SaaS co’s

One the most important metrics in SaaS is net dollar retention (“NDR”). It tells you what percent of revenue from current customers you retained from the prior year, after accounting for upgrades, downgrades, and churn. For SaaS businesses with annual or multi-year contracts, formulaically it’s beginning of period revenue + upgrades — downgrades — churn all divided by beginning…
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Run a better board meeting

We’ve been a part of many board meetings.  Below are some of the best practices that should be adopted for a smooth and productive meeting.   Voting matters should be socialized prior to the board meeting. Don’t surprise board members with a vote they haven’t had time to think through, especially if the matter goes…
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SaaS IPOs take $318mm of capital (median)

We looked at the equity and debt raised as well as remaining cash of the past 49 SaaS IPOs to determine how much net capital it took them to get to IPO. According to that data, it takes $314mm on median and $571mm on average. The average is skewed by Mcafee, Palantir, Snowflake, Dynatrace, and…
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The best VC by IPO count

Last week, we published blogs showing the average ownership of tech founders and VC at the time of IPO. The dataset included 160 tech IPO’s going back years. We dug further into the data to see who the actual VC were that invested in these incredibly successful companies; there are clearly certain investors that appear…
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Tech founder ownership at exit

Snapchat cofounders Evan Spiegel and Robert Murphy owned a combined 44% of Snapchat before it went public. Mark Zuckerberg owned 31% of Facebook, Sergey Brin and Larry Page owned 31% of Google, the founders of Eventbrite owned 34%, and Reed Hastings owned 24% of NetFlix. These are remarkable levels of CEO ownership upon going public/exit,…
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VC will own 53% at exit

How much of your company will VC own at the time you exit? We looked at the level of VC ownership of 160 tech companies at the time they went public to answer that question. The median and average level of VC ownership at exit was 53% and 51% respectively. By the time of exit,…
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Strategic investors dont matter in tech

Strategic investors, defined as corporations that make venture investments, can be a valuable source of capital but are they critical? No. We dug through the filings of 160 tech companies and found that only 29 of them had a strategic investor (18%).   Some industries have more prevalence of strategic investment than others. For instance,…
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Consumer tech multiples here for Q2

Below are revenue multiples for publicly traded consumer tech companies we follow (B2C). Industries and therefore multiples vary widely. Commentary is below. If you’re looking for data on SaaS multiples, check out our post from last week.   Social media came down to 15.6x. Multiples rose steadily through 2020 peaking at 22.7x on median in…
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An easy way to improve net dollar retention

Maintaining net dollar retention over 100% is critical to the health of your SaaS business and getting a premium valuation. One easy hack to improve NDR is to include automatic price escalators in your annual contracts with customers. Our portfolio companies do this, and the automatic price increase upon renewal is anywhere from 5% to…
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How to cold email a VC

Most VC hate cold emails from entrepreneurs. Reasons vary: i) cold pitches are often poorly prepared; ii) skeptical VC will say to themselves “why couldn’t you find a warm relationship to fund this” or “why am I seeing this and not someone else;” iii) some VC insist that you actually go out and find a…
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