Fresh Insights

Analyses, Musings & Observations

SaaS M&A is much harder than you think

We spoke to an investment banker yesterday about his view of the SaaS market.  Some of the learnings he shared where surprising, and a departure from what most bankers and investors will tell you.  Because the conversation was so candid and not a glowing view of SaaS, he’ll remain anonymous for purposes of this article,…
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SaaS may be recession proof

SaaS Capital, a lender to software businesses, put out an excellent research piece which examined the performance of publicly traded SaaS businesses during the recession.  The 3 page research report is well worth the read, and we decided to summarize some of the findings. Below is the data and under that are observations.    …
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Market size determines the IPO

IPO’s are not only an exit, they’re usually also a company’s largest capital raise.  Below we look at the size of 106 tech IPO’s.  The overall takeaway: i) the larger the size of your market, the more money you’re going to raise, especially at IPO; and ii) the year of a tech company’s IPO has…
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How to negotiate with VC – part 2

Below is a continuation of a recent blog post about a book called Never Split the Difference by Chris Voss.  Chris was one of the premiere FBI Hostage Negotiators in the world, and his tactics could be useful for negotiating with customers, vendors, and of course your VC.  The original blog we wrote highlighted some…
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How to negotiate with VC

I just read a book called Never Split the Difference by Chris Voss.  Chris was one of the premiere FBI Hostage Negotiators in the world, and his tactics could be useful for negotiating with customers, vendors, and of course your VC.  Excerpts from the book are below.   Create warmth by using first names.  “I’m…
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The right approach to SaaS onboarding, CS, sales, and patents

Last week we met with a SaaS business that in our view is doing literally everything right.  Below some of my notes which I think any software executive will find helpful.   Customer Success.  At this company, customer success reps are specialized by industry so that they can speak the customer’s language and develop some…
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Will you be the 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 105 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 determine…
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The Series A Report

What valuations are founders asking for when they raise their Series A? Since May 2018, we’ve had conversations with 275 companies about their Series A rounds.  Below is aggregate data on these 275 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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The state of consumer tech valuations

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 (enterprise value/revenue).  Below is the data along with a few observations.     Social media’s slide has paused.  The median revenue multiple is now 7.8x, up from 6.5x in…
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SaaS valuations look strong

SaaS multiples look steady: of the 82 SaaS companies we follow, the average public SaaS business is trading at 10.03x revenue while the median is 7.72x.  Interestingly, the gap between the average and median has never been larger for the time period shown, meaning more attractive SaaS companies are being rewarded with big premiums.  The…
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