November 19, 2024 SaaStr : The Arguments For Not Raising at a Unicorn Valuation

There are significant downsides to raising at $1B. Especially today: #1. It’s Going to Be Very Hard to Make Those Unicorn Investors Money Today. #2. You’ll Start Attracting The Wrong People to Join You #3. Internal Inflation Will Accelerate. Everything Will Get More Expensive.   (read more…)

CATEGORY: capital, resilience, risk, valuation

April 4, 2024 SaaStr : The 21 Top Excuses for Not Closing A Deal

Sales is hard. And not only is it hard, but you shouldn’t be closing every deal you are in. Why? Well, if you’re closing every deal you are in, you’re not being invited to the deals where your product has competition. Where it has gaps. You aren’t being invited to where you’ll want to be to grow, if you magically close every deal you are in. And closing every deal you are in is also generally a sign you the company itself isn’t doing enough marketing. Still, the best sales reps close so much more than mediocre ones. And what you hear a lot from the mediocre ones are … excuses.  But hear these excuses too often from a rep, and you have the wrong rep. Even today, when sales for many of us is harder. Probably, especially today. (read more…)

CATEGORY: customer acquisition, product-market fit, resilience

March 29, 2024 SaaStr : Can You Still Get Acquired for a Decent Price if Growth Has Slowed or Even Stopped? Yeah, Sometimes

Is a SaaS startup at $10m ARR growing basically 0% objectively worth $80m today? No. It might be worth close to nothing based on a DCD analysis. No VC would touch this startup for a Series B round. No VCs at all. Even a PE firm wouldn’t buy it with no growth at all, I don’t think. But even if you’re out of ideas for now, don’t give up all hope of a potentially decent M&A offer, especially if you are cash-flow neutral and haven’t raised too much (that’s important). If you’re in an important space, someone may still want you. Just keep doing what matters, and what keeps your customers happy. (read more…)

CATEGORY: leadership, resilience, valuation

March 19, 2024 SaaStr : What Are The Odds You Get Acquired Within 5 Years for a Good Price? Around 1%-1.5%

So my educated guess from this data: 1%-1.5% of startups have a “good” exit in the first 5 years. That sounds pretty tough, and I guess it is. But it also means just plan on going longer. A number of my best “exits” had no great M&A offer the first 5 years, and a number of others had soft offers that fell apart in the end. Go long. If something great comes up first, maybe take it. And be optimistic, too. But realize it may be years 6-10+ where you build the real value. 5 is fast in SaaS and B2B. (read more…)

CATEGORY: resilience, SaaS

March 14, 2024 SaaS Capital : The Rule of 40 is Dead… Long Live the Rule!

For companies at least 2 years away from an exit transaction, grow as sustainably fast as your expected access to capital will allow you in your chosen market, and burn as much cash as you can access. For companies with an exit horizon within 2 years, get to breakeven to own your destiny. (read more…)

CATEGORY: growth, resilience, SaaS

November 16, 2023 SaaS Capital : What is the Average Deal Size for Private SaaS Companies in 2023?

Deal size is correlated with company size. For example, companies with ARR $1 – $3 Million in ARR show a median ACV of $16,197 while companies with ARR of $10 – $20 Million show a median ACV of $35,831. For all but one company size (those with ARR $5 – $10 Million) ACVs generally declined vs. 2021. (read more…)

CATEGORY: growth, resilience, SaaS

November 8, 2023 Open View Partners : 2023 SaaS Benchmarks Report

1. While growth is much harder to come by in 2023, there are pockets of resilience amid the doom-and-gloom.
2. The North Star for many has become ARR per FTE, which reflects the productivity of your team. We’ve seen big increases in ARR per FTE year-on-year.
3. Positioning yourself as “AI” doesn’t impact growth. But monetizing AI does.
4. To drive productivity, companies need efficient product-led growth (PLG), expansion within the customer base, and improved operations.

CATEGORY: leadership, profitability, resilience, SaaS

October 5, 2023 SaaSletter : 2010 – 2021 SaaS Industry-wide Benchmarks

Positively, this speaks to:

• SaaS applications generating positive customer ROIs to earn land and expand within orgs
• Broadening of product suites, leading to larger “expansion surface areas”
• The increased revenue-generation emphasis of customer success as a function
• Installed base math: the early era of SaaS had definitionally a small installed base to expand upon. Whereas today’s SaaS vendors have decades of installed bases to expand from →that historic-to-new ratio imbalance mathematically will favor expansion as a driver.

• Challenges in winning new logos: CAC CAGR of 7%
• With field sales getting harder: CAC CAGR of 7% (vs 4% CAGR for inside sales)

CATEGORY: profitability, resilience, SaaS

August 14, 2023 Pitchbook : Q2 2023 Public BDC Venture Lender Earnings

At the end of Q2, the 5 BDCs had $1.335BN in available liquidity via cash and credit facilities, a tick up of ~$175M from Q1. Hercules represents 50% of this dry powder, roughly the same share as at the end of Q1. The median investment yield of the 5 venture debt BDCs has increased from 12.4% in Q1 2022 to 16.2% in Q2 2023, an increase of 380 basis point (“bps”), or 3.8%. That’s an ~31% uptick in yield achievement in the span of 6 quarters. The bulk of this increase (290 basis points) occurred in 2022 with a further increase of 90 basis points in 1H 2023. (read more…)

CATEGORY: capital, debt, resilience

August 8, 2023 Bessemer Venture Partners : The Cloud 100

The macro background has nonetheless hurt the average Cloud 100 company. For years we saw growth rates increase, but in 2023, the average growth rate for a Cloud 100 company – the 100 best private companies in the world – has been nearly halved. After years of defying gravity and reaching record highs, headwinds eventually caught up with Cloud 100 fundamentals. The average Cloud 100 revenue growth rate fell significantly to 55% within the year, with the growth rate of the top quartile companies falling to 70%, once again reinforcing the extremely challenging year that the world’s best cloud companies had to deal with. (read more…)

CATEGORY: growth, resilience, SaaS