SaaStr

MARCH 29, 2024

So this CEO really wanted to buy a startup at around $10m ARR, that actually wasn’t remotely close to #1 in the space, and wasn’t growing anymore. Is a SaaS startup at $10m ARR growing basically 0% objectively worth $80m today? No VC would touch this startup for a Series B round. But barely growing at all.

Pricing 218

Pricing Scale Startup Acquisition 218

Tom Tunguz

AUGUST 8, 2021

Pricing is one of the questions that persist through the evolution of a company. A common topic today in software startup board rooms is: should the company price by seat or by usage? Madhavan has led more than 200 pricing projects across software companies. It’s the canonical book on modern pricing.

Pricing 233

Pricing Startup Strategy Innovation 233

Tom Tunguz

FEBRUARY 19, 2019

Startups are innovation machines. Others want to innovate in every dimension and re-invent every discipline from pricing to marketing to support to customer success. At the outset, Brad also sought to change the pricing model. So pricing’s a really difficult thing, right? We wanted to be innovative.

Pricing 241

Pricing Startup Sales Hiring Innovation 241

Tom Tunguz

AUGUST 7, 2022

But no relationship exists between the Nasdaq’s price level & multiples. The data suggests the market has attained a pricing floor. I can’t ascertain how record fundraising inflows into private equity funds might bolster these prices, but the billions burning holes in PE wallets must impel some activity.

Acquisition 258

Acquisition Pricing Startup Software 258

Tom Tunguz

MARCH 10, 2022

I’m going to tell you a bit about two startups and I’d like you to guess the name of each company. Both startups provide database software to developers to build applications. Both companies employ a usage-based pricing model: pay for what you use. Both of these businesses are publicly traded.

Startup 314

Startup Pricing Revenue Software 314

FastSpring

APRIL 18, 2024

Some businesses outgrow their home countries after a seed or startup period that saw initial success domestically, while some businesses founded with niche markets or in smaller countries may need international sales as table stakes on day one. In this article, we focus specifically on price localization: What price localization is.

Payment Methods 78

Payment Methods Payments SaaS Payments Merchant Services 78

Tom Tunguz

AUGUST 28, 2021

Should you price your SaaS per seat or per use? The first thing to state is that massive companies have been built using both pricing structures: Salesforce and Adobe bill per seat while Snowflake and Twilio charge per use. When to use per seat pricing. Would they switch if the pricing weren’t predictable?

Pricing 251

Pricing Strategy Startup Scale 251

Tom Tunguz

MAY 15, 2022

As the fiscal quarters of many startups draw to a close, board members and management teams are having one of four conversations: The World is Your Oyster, Time to Strategize, Chewing Gravel, or Go Big/Go Profitable. The x-axis is the Zero Cash Date: when the startup runs out of money. The north star should be efficiency.

Startup 323

Startup Outsourced Development Scale Banking 323

Tom Tunguz

AUGUST 1, 2022

How much value does a successful software startup create per dollar of venture investment? Over the last 30 years, a venture dollar invested in a successful US software startup generated $10 of value. In addition to MOIC patterns, the data reveals three startup fundraising epochs. Startups in the 90s raised less than $10m.

Startup 268

Startup Software Pricing Investment 268

Tom Tunguz

MARCH 27, 2023

Slower sales cycles create pipeline shocks & startups are feeling the impacts. The average startup saw a 24% increase in sales cycle from early 2022 to 2023. Startups selling to enterprises have increased 36%, twice those of Mid-Market & SMB focused companies. Sales cycles shifted dramatically in 2023.

Startup 299

Startup SMB Headcount Sales 299

Tom Tunguz

APRIL 27, 2022

Reflecting on this question a founder posed this week, I remembered how we came to be here, the three eras of startup pricing: cash-flow, multiples, and discount-to-future-value. The art of startup pricing in a recipe. $5m Startups were priced first on forward-revenue multiple. 5m on $25m post.

Startup 239

Startup Venture Capital Pricing Investment 239

Tom Tunguz

MARCH 16, 2022

Is charging by consumption (usage-based pricing) a superior model for a business? Separately, the startup may have to reinvent its GTM: new AE quotas, sales materials, margin calculations. These three questions may help guide a startup to the best answer: Is my startup selling an application or infrastructure? CPU Core.

Pricing 244

Pricing Scale Banking Startup 244

SaaStr

FEBRUARY 6, 2024

The first time, the answer was price. A related deep dive with the CEO of Mailchimp here: The post Dear SaaStr: What Prompted You To Sell Your Startups? I’ve been through it 3 times. Once as a start-up exec, and twice as founder. In my first start-up job, we were acquired for $1b with < $10m in revenue. appeared first on SaaStr.

Startup 178

Startup Cloud Pricing Revenue 178

SaaStr

SEPTEMBER 28, 2022

HubSpot for example, which has been very judicious on holding the line on pricing and ACVs, raised prices 12% for the first time since 2018 — albeit only on new customers: Slack also similarly did its first pricing increase in history recently, of about 10%: Prices are going up in SaaS.

Pricing 234

Pricing Startup SaaS 234

Tom Tunguz

SEPTEMBER 15, 2022

Not too long before the public market correction, high-growth startups routinely commanded 100x ARR multiples. Doesn’t this acquisition reset the market price despite this year’s 70% correction? Doubly true when the median public company today is trading at 6.3x. The answer is likely not.

Startup 324

Startup Acquisition Pricing Revenue 324

SaaStr

JULY 25, 2019

For most SaaS apps, you want to at least start with “just right”, Goldilocks pricing: Too high a price, and you start to add friction to the sales process. So too high a price will dramatically increase friction, likely not enough to be worth the additional revenue per deal. Deals take longer, leads shop other vendors, etc.

Pricing 190

Pricing Startup SaaS Branding 190

Tom Tunguz

MARCH 25, 2022

The company announced it would mark its shares to a market price 40% less the last round. In a fundraising environment awash with capital and term sheets lapping up on the front doors of many startups, why might we see more self-repricings? Startups appeal to candidates span many dimensions: influence, category creation, smaller teams.

Startup 261

Startup Software Review Forecasting Pricing 261

Tom Tunguz

JANUARY 4, 2023

The US startup M&A market in Q4 2022 was one of the quietest in the last 20 years. A $22m median M&A price implies most of these transactions were acquihires - acquisitions that value a company for its team. During the 2013-2014, median acquisition prices increased by 50% in less than a year, from $36m to $54m.

Startup 282

Startup Marketing Acquisition Pricing 282

SaaStr

NOVEMBER 30, 2020

There’s a fun — and very lucrative and rewarding — exercise I like to go through with most of the startups I work with. Now … On that deal … go quote twice your highest price ever. And if you have a true solution, that really makes an impact … you’ll probably get the 2x pricing. Double Your Pricing.

Pricing 270

Pricing Sales Hiring Engineering Enterprise 270

SaaStr

JULY 29, 2022

But what about startups? Most VC funds “carry” startup investments at their last round price, unless their value has been materially impaired. Even if the startup isn’t quite a rocketship anymore, most smaller VC funds will stay hold it at the same value. Canva has done as well as any startup possibly could.

Startup 269

Startup Venture Capital SaaS Cloud 269

SaaStr

JANUARY 4, 2024

In 2022, revenue growth held up for many leaders, but share prices and multiples cratered. It was mixed actually, even if startups didn’t seem to get a breather, it wasn’t so bad for most public SaaS leaders. per Jamin Ball’s great summary below The Top 10 in SaaS saw their stock price up 136% on average!

Startup 171

Startup SaaS AI Pricing 171

SaaStr

NOVEMBER 10, 2022

The problem now is in many cases, startups and bigger like Meta are simply stuck with teams that are far less efficien t than we had pre-Covid. The post We’re All Paying the Price Now for Massive Overhiring appeared first on SaaStr. Marketing teams bloated in size to achieve the same goals.

Sales Hiring 251

Sales Hiring Pricing Cloud Startup 251

Mucker Capital

OCTOBER 27, 2023

In this Mucker Growth session, Kyle Poyar from OpenView delves into the critical topic of pricing for SaaS startups, aiming to rectify prevailing mistakes in your pricing strategies. Optimizing SaaS pricing is an ongoing process, and one that most startup founders struggle to perfect.

Payments 59

Payments Pricing SaaS Payments Startup 59

SaaStr

APRIL 10, 2023

However, what many businesses may overlook is the startup segment. Often, startups are lumped in with small businesses, yet this approach fails to recognize what motivates and attracts these early-stage companies. Why Seek Out Startups? How is it that you want to sell to startups differently than the rest of your customer base?”

Startup 187

Startup Scale SMB Venture Capital 187

Tom Tunguz

FEBRUARY 14, 2022

In 1968, Milton Friedman argued “ In the Price of Money, ” that higher interest rates don’t mean less borrowing. As the Fed raises rates in the next few quarters, will startups borrow less? We’ve established that interest rates are uncorrelated to startup financing over the last twenty years.

Startup 245

Startup Venture Capital Finance Pricing 245

SaaStr

SEPTEMBER 29, 2023

This showcases a narrow segment of a niche market, and it’s missing a lot of startups. Any startup in any reasonable category likely has dozens of competitors, and Altman believes the best strategy to compete in 2023 and beyond is multi-product. Startups are no longer fringe. How can a startup compete with a big company?

Scale 210

Scale Scaling Startup Sales Hiring 210

Tom Tunguz

FEBRUARY 8, 2024

We’re entering a new pricing environment for software: AI vs non-AI. It’s only happened in the last few weeks. Recent earnings have pushed some of the most important companies to all-time highs. Company Performance Confluent 34% Cloudflare 21% ServiceNow 20% Microsoft 14% This dynamic doesn’t favor everyone.

Startup 251

Startup AI Software Pricing 251

SaaStr

AUGUST 26, 2022

So they remain uncommon, even as some startups are under runway stress, etc. #2. Series B and later prices are down across the board from their peaks in 2021 and Q1’22, down 30% or more. Fenwick’s blended numbers see overall Series B and later round pricing down about 30%. #3. They’d rather pass.

Pricing 285

Pricing Social Media B2C Startup 285

Tom Tunguz

AUGUST 16, 2023

On the other hand, enough uncertainty permeates the market to depress prices. Public software companies’ share prices have fallen 10% on average in the last 30 days dotted with positive notes like the stabilization cloud growth rates for Microsoft & Google. Many startups will look to raise starting in September.

Startup 165

Startup Scale Strategy Forecasting 165

SaaStr

APRIL 18, 2022

These platforms are used to trade shares in the largest, late-stage startups: Forge Global, which just SPAC’d / went public itself, found the clearing price for trades for top startups fell 10% in February and another 10% or so in March , after just starting to go down in January. or so too in the past 2 months.

Startup 260

Startup Pricing Investment Data 260

Zuora

JUNE 7, 2023

Why startups should consider CPQ (Configure, Price, Quote) In today’s tech world, Modern Business has taken center stage, with a […] The post Why startups should consider CPQ (Configure, Price, Quote) appeared first on Zuora.

Pricing 52

Pricing Startup Business 52

Tom Tunguz

DECEMBER 11, 2022

First, the premium to the public price is 31%. As Michael Mauboussin writes in Expectations Investing , there’s information in price. Coupa’s sale continues a trend of private equity buying venture backed startups , a result of record PE fundraising & depressed multiples. Second, the multiple is 8.4x Growth Rate.

Acquisition 224

Acquisition Startup Software Pricing 224

Andreessen Horowitz

MARCH 22, 2024

We’re in the very early days of genAI and until adoption curves and costs stabilize, there won’t be any tried-and-true pricing or packaging frameworks. We’ve also seen some companies use their genAI feature as an upsell lever to increase conversion to a higher pricing tier or cover part of the cost of serving genAI.

Generative AI 118

Generative AI AI B2B Pricing 118

SaaStr

JULY 16, 2023

Dear SaaStr: Do Late Stage Startups Prefer to Get Acquired or Go Public? If all that matters is money, selling for a high price, especially late stage or just post-IPO is the way to go. It really varies. Especially these days, when the IPO markets are closed. When it was literally an IPO a Day in 2021, it seemed almost easy.

Startup 211

Startup Acquisition Pricing SaaS 211

SaaStr

APRIL 6, 2023

Dear SaaStr: How Do VCs Value Startups? The very best startups will be able to raise at higher than 10x ARR. No matter the price or how early or late. worth image from here ) The post Dear SaaStr: How Do VCs Value Startups? Valuations in venture have never varied more in SaaS than now. appeared first on SaaStr.

Startup 188

Startup Metrics Investment Pricing 188

SaaStr

NOVEMBER 14, 2022

Dear SaaStr: Should I Buy My Stock Options After Leaving a Startup? As a start-up employee: You can’t possibly have enough experience or information to know if you should exercise or not; Even if the company is doing well — is the price too high? The post Dear SaaStr: Should I Buy My Stock Options After Leaving a Startup?

Startup 206

Startup Pricing Revenue SaaS 206

Tom Tunguz

SEPTEMBER 12, 2022

Selling to very profitable customers benefits a startup. Enterprise customers’ demand is price inelastic. The single most important business decision in evaluating a business is pricing power. And if you need a prayer session before raising price, then you’ve got a terrible business –Warren Buffett.

Startup 207

Startup Market Segmentation Pricing Enterprise 207