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Sneak peek at future of SaaS investing

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Re: Sneak peek at future of SaaS investing

#71

Post by loanfirm »

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Re: Sneak peek at future of SaaS investing

#72

Post by reggieband »

doh wrote: post #67
reggieband wrote: post #53

Earlier quoted context omitted.

Thank you for the clarification. I hope I can ask another. What is the alternative that would make them enthusiastic? That is, if I am bootstrapping a business and want to attract these kind of investors then what sources of revenue would they like to see other than revenue from services?

Well, SAAS. That means subscription revenue, preferably in a market with large TAM that has simple CAC/LTV and churn calculations. Everything else is essentially a hassle.

I know Customer Acquisition Cost and LifeTime Value from working in free to play games. Total Available Market is a new acronymn/initialism for me. Funny how I don't know if it is pronounced "tam" or "tee, ay, em".

Re: Sneak peek at future of SaaS investing

#73

Post by doh »

reggieband wrote: post #72
doh wrote: post #67

Earlier quoted context omitted.

Well, SAAS. That means subscription revenue, preferably in a market with large TAM that has simple CAC/LTV and churn calculations. Everything else is essentially a hassle.

I know Customer Acquisition Cost and LifeTime Value from working in free to play games. Total Available Market is a new acronymn/initialism for me. Funny how I don't know if it is pronounced "tam" or "tee, ay, em".

Don't worry, we all learn something every day. TAM/SAM/SOM are quite important metrics while judging a business. Sequoia [0] has some good information on it.

[0] https://www.sequoiacap.com/china/en/article/measuring-produc...

Re: Sneak peek at future of SaaS investing

#74

Post by doh »

louisv wrote: post #70
doh wrote: post #31

Only a little related to this, in recent months I've spoken to ~60 growth stage equity funds and found out that essentially all transformed to be SAAS focused investors. That means they abandoned 1/3 portfolio strategy they used to have (1/3 loses money, 1/3 returns exactly 1, 1/3 returns fund) but instead are focusing on steady returns by SAAS companies at 2-3x of the investment. There are a few major implications:…

Who are the biggest "nice to have" SAAS companies you think could go under in the next crisis?

That is very hard to judge. We will need to wait and see.

Re: Sneak peek at future of SaaS investing

#75

Post by czbond »

hogFeast wrote: post #44
doh wrote: post #31

Only a little related to this, in recent months I've spoken to ~60 growth stage equity funds and found out that essentially all transformed to be SAAS focused investors. That means they abandoned 1/3 portfolio strategy they used to have (1/3 loses money, 1/3 returns exactly 1, 1/3 returns fund) but instead are focusing on steady returns by SAAS companies at 2-3x of the investment. There are a few major implications:…

Just as the shrewd investors who have been printing cash here for decades are moving out. Always right on time.

It seems like the investor profiles and expectations are different. Prior decades of VC / high growth and exit investors are now seeing those exits are no longer as common in SaaS. For many reasons, easier to start a company - more competition, more startups.

The area is moving to lower returns, which still can be good for smaller independent teams that can grow or bootstrap. They'll make a similar return to founders, since VC's cash was needed to fund large teams or infrastructure

Re: Sneak peek at future of SaaS investing

#76

Post by toomuchtodo »

arthurcolle wrote: post #5
toomuchtodo wrote: post #3

Earlier quoted context omitted.

What does that value add look like to you? I own a few SaaS sites that I bought (because I don’t have the patience and focus to build one myself) that I then work to increase the value of (based on lessons from a previous SaaS company I worked at), and I’m always interested in private equity arrangements.

What are some of the strategies that you use to increase value post-acquisition? Do you mostly try to twist the dials a bit to boost net margins, e.g. increasing automation for a product that is "already written" and can go on maintenance mode, or is it something more nuanced? I'm super interested in this topic as I've been building out 2 pretty neat SaaS products (basically web APIs that solve concrete problems for…

I have a strong disdain for vulture private equity models, such as going into maintenance mode and ratcheting up the pricing. I have folks I’ve run across in my career for SEO, UX, frontend, and work with them to explore methodologies to improve the product so customers extract as much value as possible, while setting pricing to be fair for value delivered. Their success is our success.

Re: Sneak peek at future of SaaS investing

#77

Post by metalab »

Fuzzwah wrote: post #25
falcolas wrote: post #10

Tiny capital is relative. EDIT: It's also the name of the VC firm. D'oh! Keeping the rest for posterity. Notice how there’s no actual values for what “tiny” means? If you have cash to invest on a VC company, you’re most likely already quite well off, with an equal amount invested in less risky ventures.

Tiny Capital is the name of the VC company.

It's not a VC company. We actually usually buy majority stakes, this was a bit of an exception - www.tinycapital.com
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