Fresh Insights

Analyses, Musings & Observations

SaaS acquisition multiples

On Monday Thoma Bravo announced the acquisition of Anaplan for $10.7bln. Below we highlight all the acquisitions of public SaaS companies since December 2020. Alongside multiples of publicly traded SaaS companies, public SaaS acquisitions are some of the most relevant you can look at for deriving SaaS revenue multiples. These transactions are all cash, the…
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Learnings from a SaaS IPO (Forgerock)

ForgeRock is a software company that went public in 2021. Below are some of the highlights from their prospectus. The key learnings we took away: this is a software company that transitioned to SaaS from perpetual license, pricing is not per-user, 3:1 ARR:loss ratio which is good in our view, sales are global, and upsells…
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Stop pricing per user

In our view, it’s wrong to price SaaS contracts on a per user basis. Instead, a value based approach should be taken whereby the customer will see a 20x+ return on your software while you also earn 3x to 5x on your S&M spend to acquire the customer. Once you’ve figured out the price, delight…
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Years from founding to exit in tech

We looked at how long it took 224 publicly traded tech companies to exit. Specifically, we took the difference between the founding year and the last year financials were released as a private company. The data is below and organized between SaaS companies (153) and Other Tech (71). SaaS takes a long time. On median…
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Healthcare SaaS lessons from an IPO

Definitive Healthcare went public in 2021. While it may not be a household name in SaaS, there are some learnings from their prospectus. Below we summarize the highlights. It was a 10 year journey. “We were founded in 2011 by our CEO, Jason Krantz. Mr. Krantz founded the company to provide healthcare commercial intelligence that…
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Selling a dead startup

In 2017, we had a death in the portfolio. Once all the employees left, the only remaining assets were some patents, servers, domains, and a lot of code. Eventually we managed to sell that intellectual property (“IP”). Here is what we learned. Set expectations. The value of IP is a small fraction of what the…
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SMB SaaS insight from Freshworks

Freshworks is a SaaS company that went public in 2021. Below we summarize the major points which we found interesting for running your SMB focused business. Freshworks is large and growing, and unprofitable. “total revenue was $172.4 million and $249.7 million in the years ended December 31, 2019 and 2020, respectively, representing a year-over-year growth…
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Startup tech CEO salary data

There is no dataset explicitly outlining salary levels at early stage companies, but we can see salaries from tech companies prior to IPO. The data below shows the salaries of 196 tech company CEO’s at IPO. A few observations stand out: Some of the best CEO’s take the lowest salaries. For instance, Marc Benioff of…
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Non-recurring Revenue Matters

While the value of any SaaS business is derived from recurring revenue (ARR), do not forsake non-recurring revenue streams. If you do, you’re ignoring free financing and a way to make the product stickier. Non-recurring revenue streams like onboarding fees and installation fees are a fantastic source of cash. Other non-recurring revenue streams such as…
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SaaS R&D spend data

Building out, maintaining, and upgrading a technology stack requires a constant commitment to developers and engineers. What is an appropriate level of development or R&D expense for a successful SaaS business? We looked at 141 SaaS IPOs at the time of IPO to get a sense for how successful SaaS businesses allocate to R&D. The…
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