This weekend I met someone that asked the following: “I have $5,000. How should I invest it?” He’s an electrician with a young family, some savings, and he’s new to investing. He probably expected me to steer him towards angel investing or venture capital, but those are completely wrong for a new investor. If you’ve…
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A good friend of mine just exited the business he founded for $25mm. Since he built the business on so little outside investment, he owned 52% at exit and took home $13mm. This type of exit brings up an important point: too many founders take a typical venture approach which is to focus on the…
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A few years ago, accelerators provided a lot of value for upstart entrepreneurs. Someone with no startup expertise that needed real guidance and mentorship regarding business formation, business models, processes, and investor introductions could get all of the above from a boot camp style accelerator. But as the accelerator model has become more popular and…
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One of our companies went through an M&A process that ultimately fell apart. During the process, we made big mistakes which one absolutely cannot make: Never show the acquirer all the code. The acquirer came on-site three times and audited/reviewed the code with the team multiple times. As a result, they pretty much had the roadmap…
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“By Invitation Only” is the story of Gilt Groupe. While Gilt may not have been a great outcome for some investors (it ultimately exited for $250mm but was at one time a unicorn), it was still a great outcome for the founders and there is no denying they built a truly unique and successful brand….
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Net dollar retention may be the most important statistic in SaaS. If you’re over 100%, revenue from upsells is outpacing revenue you’re losing from downgrades and churn. It means you’re keeping the customer base forever, and your current customers are a major source of growth. The latter is a wonderful bonus that isn’t well understood,…
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The bane of every SaaS business is churn. Nothing is more discouraging than a great sales month being offset by a heavy month of churn. Churn happens at every SaaS business and the general rule of thumb is 20%+ of annual gross dollar churn is a problem, 10% to 15% is acceptable, and anything lower…
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I read Trish Bertuzzi’s book ‘The Sales Development Playbook’ and it was by far one of the best sales books I’ve read in a while. The book focuses heavily on building pipeline with SDR teams. This is the first post of a few I’m going to share about this book: there was so much good…
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It may seem counter-intuitive, but if a business requires a lot of equity to grow, it doesn’t necessarily mean founders will dilute away their ownership. We recently did an analysis looking at founder ownership relative to equity raised for 38 publicly traded tech companies. The data surprised us as there is no discernable relationship between…
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When you’re a fast growing, cash burning startup with limited capital, cash efficiency is as important as growth. The measure of cash efficiency we like using for Series A companies is revenue/total capital invested. When you’re in early revenue, the metric will look abysmal, but as the business grows and realizes economies of scale (generally…
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