Fresh Insights

Analyses, Musings & Observations

1 in 3 founders will be replaced as CEO

When you finally exit or IPO, will you be the CEO or will someone else be running the company? It’s a great question so we dug into 129 tech IPO’s to figure it out. Specifically, we looked at the CEO at the time of IPO/exit and compared it to the list of key founders to…
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Dev spend at tech companies

We looked at the R&D spend of tech companies at IPO and in years prior to answer the question ‘what is the right level of spend on R&D’. The data is below and varies by industry. SaaS spend is consistently a quarter of revenue. Leading up to the IPO, SaaS companies spent on median 24% of…
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The demise of Blackberry

I recently read Losing the Signal by Jacquie Mcnish. If you were addicted to your Blackberry, it’s a must ready. It’s also a fantastic read if you want to learn how to avoid mismanaging your market position. Below are some of the passages we learned from.   Blackberry had no security equal. “No other phone…
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Learnings from Snapchat

I recently read How to Turn Down a Billion Dollars, The Snapchat Story by Billy Gallagher. The book is fantastic and full of lessons. It’s well worth the read, but below are some of the passages we learned from.   Snapchat really started as a sexting app. “He wouldn’t have to worry about sending a…
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Revenue multiples in B2C ‘internet’

Below are revenue multiples for publicly traded consumer tech companies we follow (B2C). Industries and therefore multiples vary widely. Commentary is below.   Social media is 9.9x. While the revenue multiple is still strong, it’s down from highs of ~14x in 2017. Snapchat is at 16x after falling from 40x in Q4 2016, and still…
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The Series A Valuation Report

What valuations are founders asking for when they raise their Series A? Since May 2018 when we started tracking this data, we’ve had conversations with 576 companies about their Series A rounds. Figures below like revenue, valuation, and round size are medians from conversations with founders. Remember the valuations and revenue multiples presented aren’t necessarily…
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SaaS multiples in Q4

SaaS multiples are higher than they’ve been since we’ve tracked the data (Q4 2014): of the 80 SaaS companies we follow, the average public SaaS business is trading at 11.98x revenue while the median is 9.49x. Interestingly, the gap between the average and median continues to be large (2.5x), meaning more attractive SaaS companies are…
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Strategic investors can be anything but

Often we hear founders get excited about strategic investors — corporations making venture investments — because the founders think the strategic investor will assist with the product roadmap, become a customer, intro the company to new customers, add credibility, and potentially acquire the company at some point. However, strategic investors have not been a benefit to our companies. Below…
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Measuring ecommerce health

For any B2C business, cohort performance is critical. A cohort is a set of customers acquired during a certain time period — for instance the January 2018 cohort is all customers acquired in January 2018. Key metrics in evaluating cohort performance include looking at the marketing spend it took to acquire the cohort, the amount of money…
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The impact of partnerships in SaaS

Bill.com recently went public. Their software automates complex back-office financial operations for small and midsize businesses (SMBs). One of the charts in their prospectus shows the major milestones in the company’s history. The chart is below.     The thing that really stood out to us about this graphic is that the company makes it…
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