Fresh Insights

Analyses, Musings & Observations

SaaS M&A multiples in Q2

Software Equity Group is an investment bank that puts out excellent research on SaaS markets. They’re also a great group of bankers. They just released their latest report on Q2. A summary is below but the full report may be found at https://softwareequity.com/research/. SaaS M&A is still healthy, for now. “Overall, the volume of SaaS…
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Learnings from Twitter’s 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 is it. One of the founders had started Blogger. “Ev explained that Google had approached Ev to buy…
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Learnings from a SaaS IPO – UserTesting

UserTesting is a software company that went public in 2021. Below are some of the highlights and learnings from their prospectus. What they do. “We have pioneered a video-first, enterprise-grade software-as-a-service (SaaS) platform that enables organizations to see and hear the experiences of real people as they engage with products, designs, apps, processes, concepts, or…
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Bad advice from good investors

Below are some of the things investors say to early stage companies that are just wrong.   “Don’t take the first offer you get.” While true, this is a very misleading statement to make to a crowd of early stage founders.  It’s wrong to make early stage founders believe they will get all kinds of…
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The real duties of a CEO

We’ve invested in 27 companies since our founding and we’ve seen some CEO’s use their time much better than others. In our view, below are the tasks a CEO should prioritize. Partnering. One of your priorities should be to build partnerships with bigger companies. The reasons: i) larger partners ultimately become strategic acquirers that pay…
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32% of Founders wont be CEO at Exit

When you finally exit or IPO, will you be the CEO or will someone else be running the company? It’s a great question so we dug into 191 tech IPO’s to figure it out. Specifically, we looked at the CEO at the time of IPO/exit and compared it to the list of key founders to…
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Sales and marketing spend efficiency in SaaS

What is a good rate of new revenue for every dollar of sales and marketing spend in SaaS? We looked at new revenue divided by sales and marketing spend of SaaS companies at the time they went public (“S&M efficiency”). We then compared that figure to the same calculation the year prior to going public….
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R&D spend metrics in SaaS

We looked at the R&D spend of SaaS companies at IPO and in years prior to answer the question ‘what is the right level of spend on R&D’. The data is below. SaaS spend is consistently a quarter of revenue. Leading up to the IPO, SaaS companies spent on median 24% of revenue on R&D….
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Strategic investors are overrated

Often we hear founders get excited about strategic investors — corporations making venture investments. Founders think the strategic investor will assist with the product roadmap, become a customer, intro the company to new customers, add credibility, and potentially acquire the company at some point. However, strategic investors have not been a benefit to our companies. Below are…
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B2C cohort performance

For any B2C business, cohort performance is critical. A cohort is a set of customers acquired during a certain time period — for instance the January 2018 cohort is all customers acquired in January 2018. Key metrics in evaluating cohort performance include looking at the marketing spend it took to acquire the cohort, the amount of money…
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