Fresh Insights

Analyses, Musings & Observations

SaaS Insights from a SaaS lender

If you haven’t subscribed to SaaS Capital’s emails, you should.  They put out fantastic data on the SaaS market.  The release below came from Managing Director Rob Belcher recently.  In it, he shares some observations from the past year.  The below is verbatim from Rob.   “SaaS is about to enter its third decade, and…
Read More

The most entertaining book on SV

I read “Chaos Monkeys, Obscene Fortune and Random Failure in Silicon Valley.” The book is a 2015 vintage, but a lot of the lessons and take-aways are relevant today. It’s a great read that I would highly recommend; key excerpts are below.   FB’s data isn’t that valuable. “The miserable conclusion was that Facebook, though…
Read More

Finding your churn floor

Peloton’s prospectus (known as an S1) is fantastic in that the company shares a lot of data about the business. One trend however, really jumped out at us: while user engagement is increasing dramatically, churn is not declining. Below is a more detailed graphic which shows the trend. As you can see, old cohorts are…
Read More

The acceptable level of SaaS operating loss

Profitability is not a requirement in SaaS. Of the 64 SaaS IPO’s below, 53 of them were not profitable at the time they went public (83%). Clearly a certain level of burn is ok so long as you’re growing, but what is that level? On median, the operating margin was -23%, meaning for every $1…
Read More

No two startup stories are the same

Below we present the graphics of two startup stories: Casper and Zoominfo. Both companies went public, both are venture backed, and that’s where the similarities end. Casper is an ecommerce company that sells mattresses online. They IPO’d 6 years after founding and grew organically thanks to $248mm in equity funding. Zoominfo provides data on leads….
Read More

Your ‘Break the Glass’ Plan

Sequoia put out a great post with their take on the coronavirus and suggestions for adapting to the oncoming business slowdown.  You can find it here.  I’ve spoken with quite a few of our founders as well; insights from our portfolio are below.   It’s ok to lose a year.  We’ve let our founders know…
Read More

Growing your SaaS cohorts

Growing SaaS cohorts Before we get into the meat of this post, first, a quick refresher: a cohort is a group of customers acquired at a particular time; for instance the “January 2018” cohort would be those customers who were acquired in January 2018. One very important measure in SaaS is cohort growth. Often times this…
Read More

Tech may be recession proof

That’s an aggressive title for a blog, but the data shows it may be true. We looked at the quarterly revenue growth of 47 tech companies before and after the recession and remarkably, the sector performed well. Below is the data. Software. Only 4 companies showed real YOY drops during the recession and as a group,…
Read More

How to price SaaS

Price Intelligently put out phenomenal content on how to price your SaaS product.  A link to the full report is at the end of this blog and it’s well worth the read.  Below are our biggest takeaways.   Don’t use competitors’ pricing as your basis.  “the biggest downside of competitor based pricing should be obvious….
Read More

SaaS revenue per employee: ~$250k

We took a look at the employee count and revenue of 77 publicly traded SaaS companies to determine revenue per employee. The data is below and shows a median of $263k. For newer companies that IPO’d after 2018, the median was $245k. Observations are below: Correlation is strong. The correlation between employee count and revenue…
Read More