Fresh Insights

Analyses, Musings & Observations

What follow on capital really means

Being a small fund, one common question we get is whether we have follow on capital.  Like most VC’s, we do have follow on and generally invest more than we originally did when we follow on, but like most VC’s, our follow on capital comes with strings.  Here’s what VC don’t tell you about their…
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Strategic investors dont matter

Entrepreneurs are always looking for “Strategic Investors” – corporate VC such as Intel, Verizon, SAP, Microsoft, etc.  The view is that these investors provide not only capital, but also guidance on the product roadmap, engineering/dev resources, critical introductions, and they’re often customers themselves.   demand for strategic investors lead us to ask: how important are Strategic…
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Stop giving shares to advisors

  A startup founder recently asked “so what’s the right amount of equity to give to advisors?” The answer is none.   Here’s why.   No one cares who your advisors are. We’re a Series A investor and never have I asked “so who are your advisors?” It’s just not important.  What investors care about are…
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Twitter’s wild startup story

Recently I read Nick Bolton’s book “Hatching Twitter.”  It is the story of Twitter and it is fantastic.  Below I paraphrased some of my favorite sections, but if there is any book about startups to read this summer, this is it.       One of the founders had started Blogger.  “Ev explained that Google…
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Lessons from successful startups

Recently I read “Once You’re Lucky, Twice You’re Good” by Sarah Lacy.  It’s a fantastic book about the re-emergence of Silicon Valley after the tech bubble in 2001.  The book is well worth a full read and I highly recommend it.  Below are snippets of the book we found most informative.     MySpace was…
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The SaaS M&A Report – Q2 2019

We recently got Software Equity Group’s SaaS M&A Snapshot for Q2 2019.  SEG is an investment bank focused SaaS companies and they put out fantastic data on what they’re seeing in the market.  Key observations from their latest report are as follows:   Deal volume is still high.  There were 277 M&A transactions in SaaS…
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The death of Yahoo

Nicholas Carlson wrote a fantastic book about Yahoo entitled “Marissa Mayer and The Fight to Save Yahoo.”  Below I have paraphrased what I found to be valuable sections, verbatim; the full book is definitely worth the read.     Allow employs to give feedback, anonymously.  The questions were submitted during the week leading up to…
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Your target ACV – $25k

Average Contract Value is important, but don’t obsess over it.  Maximizing ACV shouldn’t be the goal and as you’ll see below, SaaS companies that do exit had a modest median ACV of $24k.  A few observations:   Bigger software companies have smaller ACV’s.  Below is a data set of 69 publicly traded SaaS companies and…
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12 commandments of customer success

We’ve had the good fortune of learning from and investing in SaaS businesses with excellent customer retention and upsells. Below are some of the key learnings we’ve gathered over time.   The Customer Success Team is not the only group in charge of customer success.  Preventing churn is everybody’s job, so your engineers should talk…
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Unprofitable is ok

I cringe writing that title because we’re sticklers for cash efficiency and achieving cash break even. However, we looked at 111 tech companies at IPO: 82 of them were not profitable (74%) and 71 were not generating positive cash flow (64%).  The data and additional observations are below.       Ecommerce, Hardware, and Gaming…
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