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State of Independent SaaS [pdf]

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Re: State of Independent SaaS [pdf]

#11

Post by mritchie712 »

inapis wrote: post #4

Some surprises for me - 1. Why is VC funding so down the rank compared to self funding, friends and family, angels and even debt? Is it probably because VC funding expects a >100x exit and most SaaS probably can't deliver that? Or are SaaS founders turning away from VC for ideological reasons (like want to enjoy the process instead of rushing to justify a valuation?) 2. 50%+ people pursued ideas which were not their…

I run a SaaS (https://seekwell.io), here's my answer on a few of these:

1 - If you're a developer and / or willing to learn, you can get something up and running that people are paying for with little to no capital. There are a lot of deals on things like AWS and GCP if you look around (e.g. 5 to 100k in credits).

2 - It's easy to imagine "other people" buying things. When you start asking yourself "would I buy this thing?", you can quickly shoot down a lot of ideas and that's not as fun as dreaming up people that would buy it.

4 - Our reason for no CC is we want as little friction as possible to get started. The infra cost is negligible as people that aren't going to convert don't use the product much during the trial anyway.

Re: State of Independent SaaS [pdf]

#12

Post by mritchie712 »

zabana wrote: post #5
inapis wrote: post #4

Some surprises for me - 1. Why is VC funding so down the rank compared to self funding, friends and family, angels and even debt? Is it probably because VC funding expects a >100x exit and most SaaS probably can't deliver that? Or are SaaS founders turning away from VC for ideological reasons (like want to enjoy the process instead of rushing to justify a valuation?) 2. 50%+ people pursued ideas which were not their…

how would you go about validating an idea if you don't have at least a prototype to show potential customers ? This has been suggested to me on many occasions but I fail to understand how it works in practice. I'm not being sarcastic I'm genuinely interested because if this is possible it would save me a whole lot of time and headaches.

check out http://momtestbook.com/

Re: State of Independent SaaS [pdf]

#13

Post by bob33212 »

zabana wrote: post #5
inapis wrote: post #4

Some surprises for me - 1. Why is VC funding so down the rank compared to self funding, friends and family, angels and even debt? Is it probably because VC funding expects a >100x exit and most SaaS probably can't deliver that? Or are SaaS founders turning away from VC for ideological reasons (like want to enjoy the process instead of rushing to justify a valuation?) 2. 50%+ people pursued ideas which were not their…

how would you go about validating an idea if you don't have at least a prototype to show potential customers ? This has been suggested to me on many occasions but I fail to understand how it works in practice. I'm not being sarcastic I'm genuinely interested because if this is possible it would save me a whole lot of time and headaches.

You cannot get full validation until you have a product and have real people giving you real money for that product. But you can get some data points which have some correlation with future product market fit.

Re: State of Independent SaaS [pdf]

#14

Post by threeseed »

deltron3030 wrote: post #6
inapis wrote: post #4

Some surprises for me - 1. Why is VC funding so down the rank compared to self funding, friends and family, angels and even debt? Is it probably because VC funding expects a >100x exit and most SaaS probably can't deliver that? Or are SaaS founders turning away from VC for ideological reasons (like want to enjoy the process instead of rushing to justify a valuation?) 2. 50%+ people pursued ideas which were not their…

>Why is VC funding so down the rank compared to self funding, friends and family, angels and even debt? Mental health and emotional attachment I guess, working at a scale you're comfortable working at. The tools, frameworks etc. you prefer, and the community around those can all contribute to developer happiness. So if you optimize mainly for growth you might throw many things out of the window. I think the more deve…

> The VC way seems to be more suited for more marketing oriented entrepreneurs who may not even code

Actually this is completely wrong.

Investors at all stages from angel to VCs look for strong technical and product leadership from the founding team. Unless you have had a previous successful startup you will not get funding if you are some random executive with an MBA who doesn't know the technical details of the product.

And the reason a lot of entrepreneurs go the VC route is because you get money e.g. $2-5 million which allows you to set up a proper team and build a proper product without worrying about paying the bills. And because they want their product to be used by as many people as possible.

Re: State of Independent SaaS [pdf]

#15

Post by threeseed »

Eikon wrote: post #3

> and the high chance a startup fails in its first one or two years. I never understood why people like to spread this "fact" around. Of course a company will fail in it's first years, if not, it's a company that is at least not failing. Also, it means nothing, not all companies are started equal and these statistics mix everything and everyone in the same basket, there is too much noise involved for this metric to m…

Because if you're on the VC funding train then you are almost guaranteed to fail in the first 2 years.

Why ? Because your Seed Round is only going to get you 18 months runway before you will need to raise a Series A. But VCs don't tell founders enough that the chances of that are in the single digits.

And so you get these founders with a company that is unprofitable and growing well but not growing well enough to get more funding. Which then means the company dies.

Re: State of Independent SaaS [pdf]

#17

Post by buttscicles »

steve_taylor wrote: post #16

Diversity continues to be an issue in SaaS. Only 11% of founding teams include a non-male and 21% include a non-white founder. It must be the VC boys' club at work, right? Have you raised funding for this company? 11.73% Yes 88.27% No

Maybe not VCs, but no doubt highly influenced by existing power structures nonetheless. Not everybody can afford to start a business for whatever reason (money, time, opportunity)

Re: State of Independent SaaS [pdf]

#19

Post by [deleted] »

buttscicles wrote: post #17
steve_taylor wrote: post #16

Diversity continues to be an issue in SaaS. Only 11% of founding teams include a non-male and 21% include a non-white founder. It must be the VC boys' club at work, right? Have you raised funding for this company? 11.73% Yes 88.27% No

Maybe not VCs, but no doubt highly influenced by existing power structures nonetheless. Not everybody can afford to start a business for whatever reason (money, time, opportunity)

[deleted]
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