SaaStr

OCTOBER 3, 2023

The reality is, few folks have all 3 options available to them: Most startups cannot attract venture capital, at least not in the early days. Just a price. That extra capital in the early days really can help. Dear SaaStr: Which Way Should I Go, VC or Angel Investors or Customer Funding? Often, years longer.

Venture Capital 254

Venture Capital Startup Investment Pricing 254

Tom Tunguz

MARCH 23, 2023

Q1 volumes by year show broad declines across early-stage venture capital. Examining the ratios of rounds, we can assess where capital is flowing. First, the market hasn’t yet determined the clearing prices for Series B companies. The hardest round to raise so far in 2023 is the Series B.

Venture Capital 318

Venture Capital Pricing Startup Marketing 318

SaaStr

DECEMBER 25, 2023

Venture capital is more than just funding. Reiterating the key point, Jason underlined that startups need to think beyond raising a maximum amount of money at the most attractive pricing. Instead, companies should carefully gauge their need for venture funding and evaluate the right amount of capital to raise.

B2B 237

B2B Investment Venture Capital Scale 237

SaaStr

MARCH 5, 2021

When you go to raise venture capital, if you are in the fortunate group of start-ups with access to venture capital, you’ll either have options (more than one VC wants to fund you), or you won’t. If (x) you only have 1 offer and (y) you need to raise venture capital, the only question to ask is probably When.

Venture Capital 349

Venture Capital Branding Pricing Investment 349

SaaStr

AUGUST 24, 2023

How much optionality do you give up when you raise venture capital? — Jason ✨Be Kind✨ Lemkin  (@jasonlk) August 20, 2023 So each time you raise money at a certain valuation, you’re raising the price you have to sell for, and in that sense, decreasing optionality. It’s really the last stop before IPO or Bust.

Venture Capital 207

Venture Capital Acquisition Pricing Investment 207

Kellblog

MAY 8, 2019

Every so often I post highlights from the quarterly Fenwick & West Venture Capital Survey , as much to share knowledge about the existence of the survey [1] as to share its current-quarter data. First, it shows trends in price changes over time across various VC rounds. This survey is important for two reasons.

Venture Capital 73

Venture Capital Finance Pricing Startup 73

SaaStr

SEPTEMBER 20, 2023

Why does Mike Maples believe there is a direct relationship between price and risk? Why does Mike Maples believe that outliers by their very nature are lower priced? Why does Eric Paley believe we will have the biggest chasm between TVPI and DPI in the prior vintage of venture capital returns? Why can it be dangerous?

Venture Capital 257

Venture Capital Investment Pricing Startup 257

SaaStr

AUGUST 1, 2022

So much has changed in venture capital since the start of the year, and many founders don’t fully understand it. And founders don’t really need to understand all the changes in venture capital. And the price is 30x higher, so anything but a huge check won’t really move the needle on ownership.

Venture Capital 305

Venture Capital Startup Investment Pricing 305

SaaStr

JULY 18, 2022

Cloud stock prices have still fallen 50%+ from their highs, venture capital funding is way down as a result, and many are getting nervous about things. The big drop in IT spend will be in devices and computers. CIOs are cutting back on printers, PCs and tablets. Now, there are plenty of current challenges right now.

Venture Capital 340

Venture Capital Software Cloud Forecasting 340

SaaStr

DECEMBER 7, 2020

“How Would a Person Start a Venture Capital Fund?” More details on why and how here: How would a person start a venture capital fund? 9. “What Are Typical Price Increases in SaaS?” What’s a typical price increase I can expect when renewing my SaaS subscriptions?

Venture Capital 329

Venture Capital Sales Hiring AWS Cloud 329

SaaStr

MAY 9, 2022

So despite what you might see on Twitter, venture capital isn’t in a tailspin. There is plenty of capital out there. These are epic SaaS companies, and they aren’t trading at 3x the net price of a $1B round (after dilution). Good deals are still getting done every day. There are plenty of other examples.

Venture Capital 270

Venture Capital Cloud Pricing SaaS 270

SaaStr

FEBRUARY 26, 2022

Yes, everyone still cares about capital efficiency, even in the best of times. But when you knew the next round was coming, and at a much higher price, neither founders nor investors had to worry too much if the burn rate was higher than it should have been. . * It was OK to be a bit sloppy around your burn rate.

Venture Capital 363

Venture Capital Cloud Startup SaaS 363

Tom Tunguz

MAY 23, 2021

While not as hyperbolic an inflation rate as copper or lumber, the price trajectory of early stage cloud startups does result from a similar supply demand/imbalance. 3 of the years saw declining prices. Perhaps these prices are tied to blockbuster IPO markets. Pricing rounds on multiples like public market investing.

Software Review 364

Software Review Venture Capital Cloud Pricing 364

SaaStr

FEBRUARY 1, 2023

Public stock prices go up and down, after all. The real problem is how venture capital works in practice — the nichey, quirky way private financings and investing works: VC investment is high-ish risk and you need to know when to just walk away. A lower price doesn’t make a bad deal into a good one.

Venture Capital 268

Venture Capital Pricing Finance Investment 268

SaaStr

JULY 29, 2022

So we’re in a bit of a weird world and time in venture capital. Most VC funds “carry” startup investments at their last round price, unless their value has been materially impaired. But if you don’t need to raise capital at all, you can mostly tune it out. The public markets are down 50%+. Well, sort of. It’s smart).

Startup 310

Startup Venture Capital SaaS Cloud 310

Tom Tunguz

NOVEMBER 19, 2020

If the government lends at a low rate, then the cost of capital is less, so companies should be able to invest more at the same cost, and grow faster. We should expect four outcomes: More money should enter venture capital funds. When demand exceeds supply, prices increase. These are new dollars looking for yield.

Venture Capital 352

Venture Capital Government Pricing Investment 352

Tom Tunguz

FEBRUARY 14, 2022

In 1968, Milton Friedman argued “ In the Price of Money, ” that higher interest rates don’t mean less borrowing. Is this true in venture capital? He would echo this sentiment in an article Reviving Japan. After the U.S. After the U.S. Apparently, old fallacies never die.”.

Startup 276

Startup Venture Capital Finance Pricing 276

SaaStr

JUNE 10, 2023

The 10x Rule: What Raising $1 of Venture Capital Really Means Personal example: in my first startup, we sold for $50m after 12.5 But most of the horror stories (not all, but most) are really where the sale price is < 3x the amount raised, and/or a huge amount of capital went into the company and an outside CEO was brought in.

Venture Capital 261

Venture Capital Scale Startup Pricing 261

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. Web3/crypto startups are often priced this way.

Startup 256

Startup Venture Capital Pricing Investment 256

SaaStr

FEBRUARY 25, 2023

First, if the exit price is at least 2x-3x the total amount raised, it can be worked out. You should only raise Venture Capital if you (x) have to, or (y) it’s “cheap”. By cheap, I don’t just mean price. So if you raise money at say a $50m valuation, and want to sell for $40m … yes, that’s a problem. But … Three things.

Venture Capital 268

Venture Capital Pricing Investment Revenue 268

SaaStr

JULY 7, 2020

These are incredible companies with incredible teams each with a unicorn “exit” And yet, neither really met the bar of selling for 10x the total amount you raised, and/or 3x the last round price. Or at least, an exit 3x the price of the round you just closed. The 10x Rule: What Raising $1 of Venture Capital Really Means.

Venture Capital 335

Venture Capital Acquisition Cloud Pricing 335

SaaStr

MAY 25, 2023

Because the reality is, acquisition offers at a decent price — as measured against revenue, time, and effort — actually come at distinct phases of your company’s lifetime. At other times, the price can be crappy. But then — The $30m Venture Round Sort of Ends That Local Maximum. Vaguely.

Acquisition 361

Acquisition Venture Capital Generative AI Scale 361

SaaStr

JULY 21, 2022

VC State of the Market with SaaStr’s CEO and Cowboy Ventures. Jason Lemkin, Founder & CEO @ SaaStr and Aileen Lee, Founder & Managing Partner @ Cowboy Ventures sit down to discuss the current state of venture capital. Ticket prices go up at the end of the month! appeared first on SaaStr.

Venture Capital 272

Venture Capital Enterprise Cloud Pricing 272

SaaStr

JULY 31, 2022

The 10x Rule: What Raising $1 of Venture Capital Really Means. SaaS Pricing Strategies that Work: How to Design an Optimal Pricing Model with FastSpring VP Product. Dear SaaStr: How Do You Split Up Founder Shares? It turns out, most founders don’t do a 50/50 split. A 2:1 split is most common. Much more here.

New CTO 267

New CTO CTO SMB Venture Capital 267

SaaStr

NOVEMBER 25, 2021

These are the Best of Times for venture capital. And as part of this, more and more big corporations are adding and expanding their venture arms. Many corporate venture funds that aren’t as ROI focused as traditional VC funds. No one wants to pay a bad price, no one is stupid. Some are (e.g., Validation.

Outsourcing Services 349

Outsourcing Services Investment Venture Capital Pricing 349

SaaStr

FEBRUARY 2, 2021

Even these days, in The Best of Times for SaaS, many founders are wary of Venture Capital. But early-stage venture capital is so risky. Here are some basic things I’d avoid: Be wary of low-priced secondary liquidity. Even at a substantially lower price. And be honest. Probably not. Find another.

Finance 275

Finance Venture Capital Consulting Investment 275

Tom Tunguz

JANUARY 26, 2020

Nathan Heller published an article called Is Venture Capital Worth the Risk? It’s a well-researched critique of the venture industry. If you have ideas for how to improve venture capital for founders, please tweet me or send me an email with the link above. First, venture capital has become much bigger.

Venture Capital 198

Venture Capital Merchant Services Innovation Finance 198

SaaStr

MARCH 27, 2023

They either raise prices or they don’t give discounts. If you need to raise venture capital, preparation is important, both in terms of process and in terms of expectation alignment. How do they achieve this? But it’s important to be constantly plugging in new assumptions to those to make them accurate.

SaaS Payments 224

SaaS Payments Technical Review Software Review Venture Capital 224

SaaStr

SEPTEMBER 25, 2021

Yes, there is so much more money in venture. So just one simple point: raising almost infinite venture capital is the easiest ever in the history of time — once you are obvious. They care about ARR, growth, NRR and capital efficiency. So VCs have even less time to work on non-obvious ones. Your team unproven?

Venture Capital 246

Venture Capital Startup Pricing SaaS 246

Tom Tunguz

SEPTEMBER 19, 2019

I’ve been searching for a great history of the venture capital industry since before I joined Redpoint. Creative Capital. Nicholas traces the history of the venture capital industry back to whaling. They were called venture capitalists back then, but they serve the same role. Done Deals.

Venture Capital 194

Venture Capital Technical Review Investment Pricing 194

SaaStr

OCTOBER 10, 2022

This survey informs you about sellers’ overall confidence along with knowledge of pricing, expertise in value selling, discovery, and price negotiation comfortability. Over the last three years, the United States economy has shifted drastically.

Scale 291

Scale Sales Hiring Marketing Venture Capital 291

SaaStr

APRIL 25, 2022

But with stock prices in the public markets for SaaS down 50% from their peaks in many cases, it seems much harder to make money in venture than just a few months ago. Most important for founders to understand is the venture “crunch” right now is everywhere except seed. Venture Capital seemed like a game in '20-'21.

Venture Capital 252

Venture Capital Investment Startup Pricing 252

SaaStr

JUNE 26, 2020

They’ll even often pay a higher price to get that ownership if need be. It’s how “traditional” venture capital works. And there are Series A investments of all different shapes and sizes these days. But here’s what you can assume: Most larger VC firms ($250m-$2b fund size) want to own 20% of each investment.

Venture Capital 218

Venture Capital Investment Pricing SaaS 218

SaaStr

DECEMBER 5, 2022

Experiment with different plans and position the pricing as whole numbers. Pricing is another vital lever in your business. But how do companies constantly reevaluate their pricing? Venture capital-backed companies update their pricing once every 2.8 Lever #6: Price localization.

Payments 130

Payments SaaS Payments Payment Solutions Venture Capital 130

SaaStr

MAY 23, 2022

But public stock prices are way down, and venture capital is much tighter than it was just a few months ago. So for many of us in SaaS, these are still the best of times. The Cloud is bigger than ever, CIOs are buying more than ever, and SaaS is still on a roll. So many of you will want to manage the burn more carefully.

Sales Hiring 298

Sales Hiring Management Airlines Venture Capital 298

SaaStr

DECEMBER 29, 2022

Venture Capital has dried up. You have to not only make the capital last, but make sure it lasts as long as planned. Raising prices may or may not work for you. Well, stop saying you can’t hire anyone. Stop doing it all yourself. And just go finally hire her. #2. Make Absolutely Sure Your Burn Rate is Under Control.

Sales Hiring 253

Sales Hiring Venture Capital Healthcare Communication 253

SaaStr

JUNE 20, 2022

Logan Allin, Managing Partner at Fin Venture Capital, has reviewed hundreds of deck submissions and shares the secrets to crafting the perfect presentation to win over investors. Further, you need to showcase your pricing model and the different ways you plan to monetize. Keep Everything Clear, Simple, and To-the-Point.

Venture Capital 215

Venture Capital Management Business Model Investment 215