Fresh Insights

Analyses, Musings & Observations

How fast startups exit

How many years will it take you to exit? 10 years is the generic answer, but that’s wrong.  The data says depending on what industry you’re in, it might take as long as 11 years (hardware) or as few as 4 years (payments).  We looked at 129 tech companies in various industries that have IPO’d…
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B2C multiples are down

We follow 59 publicly traded consumer tech companies (B2C) in industries like social media, marketplaces, subscription, and ecommerce.  Given the diversity of industries, the multiples vary.  Below is the data along with a few observations.     Social media has been sliding.  The median revenue multiple is now 65x.  While the revenue multiple is still…
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What to do when you hate your VC

This happens.  Occasionally you and your investors/VC won’t see eye to eye or worse yet, you’re sideways with your VC and the relationship is acrimonious or hostile.  While I’ve never had a hostile relationship with a founder, certainly there are times where we’ve been in disagreement on major issues or a founder isn’t happy with…
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The Series A Valuation Report

What valuations are founders asking for when they raise their Series A? Since May 2018, we’ve had conversations with 222 companies about their Series A rounds.  Below is aggregate data on these 222 raises with names redacted to preserve confidentiality.  Figures like revenue, valuation, and round size are medians from conversations with founders.  Remember the…
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Measuring SaaS Health

Healthy SaaS businesses show a consistent ability to upsell their current customers every year, increasing the value of each customer cohort over time.  ZScaler, a SaaS business which recently went public, shows a wonderful example of this in their public filing.  Their cohort chart below shows the initial value of each annual cohort of customers…
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Don’t obsess over Average Contract Value

Average Contract Value is (“ACV”) is a vanity metric that should be looked at as part of a group of ratios that include number of qualified leads, close ratio, sales cycle, and other critical sales metrics.  It shouldn’t be put on a pedestal.  Here is why:       The world’s biggest and best software…
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SaaS Multiples Cratered

It turns out SaaS isn’t immune to market conditions: of the 77 SaaS companies we follow, the average public SaaS business is trading at 8.07x revenue while the median is 6.66x. The average and median are down from 8.91x and 8.29x in November, respectively.  The drop in the median is significant in our view and…
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Streaming Music Trends

When a company files to go public, they do so by submitting a document called an S1 to the SEC.  An S1 is like a prospectus, and sometimes it’s loaded with really interesting industry information.  Sonos, which recently went public, is a great example of such an S1.  Below are some facts and trends about…
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You wont be a success from day 1

You probably won’t be a success from day 1.  You’re going to struggle and may even come close to failure (more than once).  The good news: there are plenty of examples of companies that had setbacks and bumps along the way, but were still a great success.  Docusign is one such success story.   Docusign…
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Net dollar retention of 107% will take you public

One SaaS metric we monitor closely is net dollar retention.  It measures what percent of revenue you retained from the prior year after accounting for upgrades, downgrades, and churn.  Formulaically it’s beginning of period revenue + upgrades – downgrades – churn all divided by beginning of period revenue.   If that formula yields a number greater…
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