What does it take to raise capital, in SaaS, in 2016?

The Angel VC

So what does it take to raise money for a SaaS company in 2016? When we invest in a SaaS startup, which almost always happens at the seed stage, the next big milestone on the company’s roadmap is usually a Series A. If you carry this thought further and assume that the biggest goal after the Series A is to get to the Series B (and so on, you get the idea) it sounds like turtles all the way down. But financing rounds are obviously not a goal in itself. They are a means to a bigger goal.

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The Best SaaS Articles of 2016 From Around the Web

Hitenism

2016 has been a year where knowledge has become freely available for anyone interested in knowing about all things SaaS. This slide deck comes from Brian’s brilliant SaaSFest 2016 presentation. Thomas Smale , How to Value a SaaS Business in 2016. How does my list of favorite articles in 2016 compare with yours?

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How Amazon Web Services (AWS) Achieved an $11.5B Run Rate by Working Backwards

Hitenism

In 2006, after Amazon Web Services (AWS) helped pioneer what we now call the cloud, product development changed forever. What once took millions of dollars and a team of engineers to create, a lone developer could suddenly hack together in half an hour. Today, one-third of daily internet users visit websites built on top of AWS. AWS is now an $11.5B run rate business and has made up for an incredible 67% of Amazon’s operating revenue last quarter.

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Q1 2016 Startup Investment Trends

Tomasz Tunguz

2016 is off to a slower start than 2015. billion in Q1 2016, a decline of about 17%. Nevertheless, Q1 2016 activity exceeded Q1 2014. The first quarter in 2016 has been the hardest quarter to raise a seed round in the past five years. Q1 venture capital investment remains steady relative to Q4 2015 at about $15 billion, but down from the near records attained in 2015.

The Five Most Critical Mistakes Founders Make When Raising Money

Hitenism

Two tweets about raising money was all it took to get 81 email responses and 53 customer development calls with founders. I haven’t had this big of a reaction to an idea and I’ve done this type of research on product ideas for the last 13 years! That’s when I realized that fundraising may be startup founders’ biggest pain point. In the interviews, my business partner and I asked founders about their fundraising process and problems.

The Top 6 Posts of 2016

Tomasz Tunguz

2016 was a year of change for SaaS, and most of the story was the public market. The Hottest Startup Sectors In 2016 - published on January 3rd, this post reviewed the patterns of investment in startups, and in particular, the sectors where investors were increasing their investment the fastest. It’s been a wonderful 2016 and I’m looking forward to another exciting year in 2017 The end of the year is fast approaching.

Our Top Picks for IRCE 2016

ReSci

The post Our Top Picks for IRCE 2016 appeared first on ReSci The Internet Retailer Conference & Exhibition (IRCE) is upon us yet again with another exciting year of industry experts covering the latest topics and trends on digital commerce, online retail strategies, and the best solutions for e-commerce technologies. The event is right around the corner.

The Hottest Startup Sectors in 2016

Tomasz Tunguz

Which of the 16 major start of categories in information technology will reap disproportionate share of investment dollars in 2016? This may be a breakout category in 2016 for Series A investments. Given the amount of seed investor interest, I expect many of these marketplaces to raise series A dollars in 2016. In conclusion, big data, education, marketplaces, and SaaS should see strong investment activity in 2016.

Here’s The Content Marketing Assembly Line Based On a Survey of 2,203 Companies

Hitenism

Most people approach content marketing like a black box. Ideas go in one end. Hours and days are spent doing something creative. And content comes out the other end. In a survey I ran of 2,203 companies, I was shocked to find that only 35% had a documented content marketing strategy. People measure and analyze all other aspects of marketing, but they don’t take that mindset and apply it to the actual practice of content creation.

Pro Tips: Lunch Spots & Sights Near Shop.org 2016

ReSci

The post Pro Tips: Lunch Spots & Sights Near Shop.org 2016 appeared first on ReSci As every savvy conference-goer knows, it’s important to maximize your experience when attending great events like Shop.org. We’ve already covered our list of can’t-miss sessions to get the most of what the Summit has to offer — now, here are our pro tips on getting.

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Giving Tuesday 2016 Round Up

wepay

million donations across 98 countries made, resulting in a total of $168 million raised on November 29 th , 2016. On Tuesday November 29 th , 2016, WePay processed $20.2 Throughout the week our Crowdfunding partners saw 139% more donation volume than the average week in 2016. The post Giving Tuesday 2016 Round Up appeared first on WePay Blog.

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Trends in Early Stage SaaS Fundraising Market of 2016

Tomasz Tunguz

Artificial intelligence is to be a big trend in the SaaS world, a theme that matured in 2016 but will very much continue through 2017. 17% of SaaS companies who have raised so far in 2016 employ machine learning. About $1B has been invested in early stage SaaS startups as of November 1. Over the last nine months, marketing startups have raised more dollars in aggregate than any other segment. The chart above shows the early-stage investment dollars by buyer within the organization.

The Quirky M&A Environment for SaaS Companies in 2016

Tomasz Tunguz

Through the end of July in 2016, $70B worth of SaaS companies sold. In 2016, these PE firms aren’t following that playbook. The 2016 software buying spree hasn’t benefitted private startups or unicorns yet, and that reflects the different strategies of the buyers. Their size follows a power law with LinkedIn at $26B and Netsuite at $9.3B.

What we're looking for in SaaS in 2017

The Angel VC

As the year is coming to an end I’d like to share a few thoughts on what we’ll be looking for in the SaaS world in 2017. This is not meant to be an exhaustive enumeration but rather a brief outline of a few big themes that I feel particularly strongly about.

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Median Startup Valuations and Down Rounds in 2016

Tomasz Tunguz

Average Series A valuations have hovered around $15M for the last 9 quarters. Series B rounds have settled into $50M, while Series C rounds have rebounded to $100M. Later stage rounds, however, have fallen by 50% from their high of $400M to just under $200M. However, in the early stages the frequency of down rounds (e.g., a Series D with a smaller valuation than a Series C) aren’t at historic or even six year highs. Series A down rounds constituted 40% of all rounds in Q1 2009.

Building any business is hard

The Angel VC

Some people thought it was provocative though, and some chimed in with good feedback: @hunterwalk building ANY business is hard — Jonathan Abrams (@abrams) March 5, 2016 Therefore I thought it would be worth following up on the topic to make sure that my message is clear. Judging from the number of Facebook likes and retweets, as well as comments on Twitter and elsewhere, my last post resonated with quite a lot of people.

SaaS Financial Plan 2.0

The Angel VC

Almost exactly four years ago I published a financial plan template for SaaS startups based on a model that I had created for Zendesk a few years earlier. I received a lot of great feedback on the template and the original post remains one of the most viewed posts on this blog up to this day. In the last few weeks I've finally found some time to create a "v2" of the template.

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The Question to Ask Before Starting a Company in 2016

Tomasz Tunguz

As the cost of capital increases in 2016, these winner take all rounds will become less and less common. It’s not that fundraising will not remain a critical skill in 2016. My father keeps a copy of Michael Porter’s Competitive Strategy on his bookshelf. An imposing dark gray tome, Competitive Strategy is a business classic. I remember reading it sometime in high school, and not understanding very much of it.

The Metric that Matters for Startups in 2016

Tomasz Tunguz

In 2016, the question that will immediately follow, “What is your annual growth rate?” When seed and Series A investors consider an investment in 2016, they will be asking themselves, “How much capital will this company need to raise before an exit?” 2015 is the end of an era, the era of startup growth at any cost. ” will be “What are your unit economics?”

2016 in Payments – The Year of….

wepay

As the year draws to an end, we asked WePay team leaders to reflect upon the past 12 months and share thoughts on what 2016 meant for payments. Payments in 2016 was the year of digital wallet proliferation. 2016 wasn’t the year of any single revolutionary development in payments. I see a few key themes in payments in 2016. 2016 saw some of the recent payment innovations blend together to provide tangible value to merchants and consumers.

Is the 2016 Economy a Risk to SaaS Companies?

Tomasz Tunguz

It is an election year. The Federal Reserve has changed its interest rate hike plan. Venture financing has slowed by upwards of 15% in the first quarter. Q1 GDP growth fell to 0.5% from 1.4% in Q4. How much have all these factors impacted SaaS companies? Are buyers purchasing less software? Each quarter, publicly traded companies release two key figures: revenue per share and earnings-per-share. Wall Street analysts forecast these figures based upon company plans and their own research.

How to use the V2MOM framework to align and inspire your B2B SaaS marketing team

Aaron Beashel

For instance, here’s what the measures might look like for the ‘Grow social traffic’ method in the section above: By end of December 2016, be posting 300 times per month to our social channels, and have completed experiments in 3 new channels (Medium, SlideShare, Quora). Just a few months into my stint at Campaign Monitor, a new CEO joined to lead the company. That CEO was a guy named Alex Bard.

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Should you take small checks from deep pockets?

The Angel VC

So you’ve recently started a company, you’ve started to talk to angel investors and seed funds about your seed round, and suddenly a large VC appears on the scene and wants to invest. What should you do? First of all, congrats. If a large fund wants to invest in your startup, that’s a great validation. Second, if you can get the brand, credibility, network and support of a Tier 1 VC into your startup early on, that can be extremely beneficial. So you should definitely consider it.

That’s a nice little $1-2M SaaS company you have here. Call me to discuss if it will scale!

The Angel VC

About two years ago, Josh Hannah of Matrix Partners wrote an excellent article titled “That's a nice little $40M eCommerce company you have there. Call me when it scales.” In it he argues that an eCommerce business with $10 to $20 million in revenues is not that hard to build and also not very valuable.

The State of the Startup Fundraising Market in 2016

Tomasz Tunguz

For all the talk about late stage rounds, megarounds and unicorns, early stage startups are benefitting disproportionately from near-record years of venture capital investment. Of the $42B invested in startups in 2015, 34% or about $14B was raised in series A and seed rounds. That figure is up from 18% in 2005. The 35% attained in 2013 share for early investment ties the 1996 record.

Five Charts on the State of the Early Stage SaaS Market in 2016

Tomasz Tunguz

As the overall venture market environment evolves in 2016, so too does the SaaS and Software segment. In Q1 2016, SaaS rounds increased a modest 10%. But early 2016 pace still exceeds the best quarters of 2010-2012. The number of Series A, B, C, and D investments in software companies stabilized at roughly 170 per quarter from mid-2013 through mid-2015, before falling 17% in Q4 2015 to a two year low. The SaaS fundraising has slowed in parallel to the rest of the market.

A better way to visualize pipeline development? (WIP)

The Angel VC

When founders show me their sales pipeline, the data is typically visualized in some variations of one of these formats: When I see charts like this, I often find it hard to quickly wrap my head around the data and draw meaningful conclusions. Sometimes, important numbers are missing altogether. In other cases, they are there but are shown on another page or in another report.

3 (free) tools to help SaaS founders with their 2017 planning

The Angel VC

Growth Calculator This little tool allows you to enter your MRR as of the end of 2016 and a target growth factor for 2017. (As you can see, I really like placeit.net :) ) In case you haven't started to think about your plan for 2017 yet, now's the time. To help you a little bit with your planning, here are three little tools that you might find useful. If you're a long-time reader of this blog, you may have seen them before.

SaaS Funding Napkin, the mobile-friendly edition

The Angel VC

My "SaaS Funding Napkin" , published a few days ago , got lots of love on Facebook, Twitter, etc. Thanks everybody! Some people (rightfully) mentioned, though, that the image is hard to read on mobile devices. So if a napkin has a good format for a desktop or laptop screen, which real-world-analogy could be a fit for mobile screens? You guessed right. Here you go (please scroll down or click here ). funding saas

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What's Really Happening in the US Venture Fundraising Market in Early 2016

Tomasz Tunguz

The startup fundraising market in 2016 has been difficult to characterize. VCs invested about $2B in January and February 2016. Punctuated by a concentrated decline in public tech stocks, the sentiment in Startupland has changed from resolute ebullience to a calmness approaching caution. Two months in, we can analyze January and February data.

7 Tips to Make Your Agency Relationships More Productive

SaaS Growth Strategy

I’d say that it’s the norm, rather than the exception, that start-up SaaS companies rely on agencies to help them execute on some aspect of their strategy as they seek initial traction, begin to grow, and scale their business. This is perhaps more true in marketing than within any other part of an organization.

From "A as in Amiga" to "Z as in Zendesk"

The Angel VC

In the last few weeks I participated in a few interviews/discussions to talk about SaaS, entrepreneurship, venture capital and related topics that are near and dear to my heart. If you're interested in me rambling about some of my earliest entrepreneurial adventures (hint: C64, Amiga,) and how I found Zendesk (hint: luck), and if you don't mind listening to a heavy German accent and lots of "UMs" and "HMMs", here you go. :-) 1.

Truffle pig reloaded – Point Nine is looking for an Associate

The Angel VC

About three years ago, we were looking for an Associate to join Point Nine and put up this landing page : We called the position "truffle pig", because just like a truffle pig is digging up the best truffles from the ground, we as an early-stage VC try to find the best startups among a large number of potential investments. I have to give full credit for the truffle pig analogy to Mathias Schilling and Thomas Gieselmann of e.ventures, by the way.

How to Run a Regression Analysis to Forecast the Return on PPC Spending

SaaS Growth Strategy

Early in my career I began working with an early stage, SaaS start-up with only a handful on employees. With a relatively inexpensive product and a very small marketing budget, one of the company's Co-founders had been tasked with testing out some initial customer acquisition strategies. Bidding on highly targeted keywords in Google Adwords was one of the logical places to start.

Looking for customers in all the wrong places

Practical Advice on SaaS marketing

When asked why he robbed banks, Willie Sutton explained “because that’s where the money is.” Not that marketers are bank robbers, but the same idea applies to finding prospective customers. If you want to get their attention, you need to go where they are. If you’re at they'll never look, it’s unlikely prospects will see you. This idea certainly sounds logical. In fact, it may sound blatantly obvious. So why do so many companies ignore it?

SaaS Financial Plan 2.0 - bug fixes

The Angel VC

In case you've started to modify the template already and want to keep working with the previous version, here are the two bugs that you need to correct: 1) Cell U124 on the Costs tab, i.e. the costs for external recruiters in December 2016, contained: =(W87-U87)*$E$124+X96 The +X96 part has been added accidentally and needs to be removed. Since I published v2 of my SaaS Financial Plan a few days ago, two alert readers have kindly pointed out two formula errors in the Excel sheet.

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5 ways your SaaS marketing plan could go wrong

Practical Advice on SaaS marketing

No matter how hard you’ve been working on your marketing plan, it still might go wrong. That’s usually not for lack of effort. It’s just that software-as-a-service (SaaS) marketing is hard. It’s different than marketing traditional on-premises software and it’s easy to make mistakes. I review the marketing programs of lots of SaaS companies and I see the same kind of mistakes over and over. This isn’t an exhaustive list, but here are 5 errors that are especially common.

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Why Drive-by Marketing Doesn’t Work

Practical Advice on SaaS marketing

So you’ve just shipped your new software-as-a-service (SaaS) solution, and for sure you’re eager to tell the world: get out a press announcement, roll-out a search engine marketing campaign, sign-up for industry events, and whatever else you can think of. Here’s some advice: Slow down. As tough as it is to resist the urge to do something , hold off a bit before going full blast with all this marketing activity. And if you’ve already started, hang on and take a deep breath.

Don’t talk techie to SaaS buyers

Practical Advice on SaaS marketing

No matter how wonderful your proprietary algorithms, the priceless virtues of your state-of-the-art platform, or the brilliance of whatever other sophisticated technologies you’ve got under the hood of your software-as-a service (SaaS) solution, here’s an unpleasant truth: Lots of your customers don’t really care. Most of your them only want to know what your solution does, not how it works. In fact, sometimes all that techie talk just goes right over their heads.

Competing in a crowded market

Practical Advice on SaaS marketing

First a confession. Every once in awhile I get a call from a SaaS company looking for help with their customer acquisition plan, and my first thought is "Are you kidding? The company tells me that they've developed a wonderful solution with a boatload of impressive features. But they're selling into a market that's already crowded with other vendors. Just what the world needs - another HR or CRM or email marketing or whatever solution.