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Sneak peek at future of SaaS investing

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Re: Sneak peek at future of SaaS investing

#11

Post by tehlike »

toomuchtodo wrote: post #3
buf wrote: post #2

I see more and more investors looking to do this especially as a solo-founder of a bootstrapped small SaaS business. As I march towards $1M ARR, the savvy investors are looking for ways to be valuable to my business as opposed to me begging investors for the next round of funding in traditional VC-backed ventures. I would be very happy to share 15-20% if the value-add is strong enough.

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.

How do you go about buying one. How do you get the leads?

Re: Sneak peek at future of SaaS investing

#12

Post by icedchai »

Ancalagon wrote: post #8
tempsy wrote: post #6

Investment opportunities that provide 15% return exist in the public markets with easy liquidity options, so what is the benefit of trying to squeeze that out of a private company where you can’t sell unless the company goes public or you try to find a buyer on the secondary market? Unless the company pays out a dividend I don’t see the appeal - usually VCs trade liquidity for the hope of massive returns that aren’t…

What public investment continuously returns 15% yearly?

Almost any tech heavy ETF such as XLK or VGT will get you there. 10 year yearly returns are over 15%. For less risk, you could do a total stock market index like VTSAX (10 year returns around 13%.) Nothing is guaranteed or "continuous" though. This is less risky than investing in a single, private company that probably has little liquidity.

Re: Sneak peek at future of SaaS investing

#13

Post by TheRealPomax »

Remember: Hacker News is not a financial service, and people upvoting articles about financial behaviour is not the same as financial advice. If it sounds too good to be true, it probably is, and was probably written by someone who mistook the luck of doing the right thing at the right time for a transferable skill.

Re: Sneak peek at future of SaaS investing

#14

Post by xyzzy_plugh »

tempsy wrote: post #6

Investment opportunities that provide 15% return exist in the public markets with easy liquidity options, so what is the benefit of trying to squeeze that out of a private company where you can’t sell unless the company goes public or you try to find a buyer on the secondary market? Unless the company pays out a dividend I don’t see the appeal - usually VCs trade liquidity for the hope of massive returns that aren’t…

Usually, if we're referring to SV VC, but there are others. Bain is notorious for squeezing dividends out of investments and they're categorized as Venture Capital.

Traditional private equity, ala Berkshire Hathaway, is still pretty prevalent. There are plenty of self-described VCs who aren't necessarily looking for a 10-100x return amongst 100 small investments, but 2-5x returns across dozens of investments.

The vast majority of companies will never have a significant exit event triggering liquidity (IPO, M&A). Does that mean they're not worth investing in?

At least with private equity, you hopefully have some ability to influence those steering the ship, and get to avoid all of the regulatory hurdles. Opaque quarterly reports and short-sellers aren't exactly encouraging.

Re: Sneak peek at future of SaaS investing

#15

Post by fnord77 »

icedchai wrote: post #12
Ancalagon wrote: post #8

Earlier quoted context omitted.

What public investment continuously returns 15% yearly?

Almost any tech heavy ETF such as XLK or VGT will get you there. 10 year yearly returns are over 15%. For less risk, you could do a total stock market index like VTSAX (10 year returns around 13%.) Nothing is guaranteed or "continuous" though. This is less risky than investing in a single, private company that probably has little liquidity.

> VTSAX

the past 10 years, yeah. but the prior 10 years were much worse.

Re: Sneak peek at future of SaaS investing

#16

Post by robjan »

icedchai wrote: post #12
Ancalagon wrote: post #8

Earlier quoted context omitted.

What public investment continuously returns 15% yearly?

Almost any tech heavy ETF such as XLK or VGT will get you there. 10 year yearly returns are over 15%. For less risk, you could do a total stock market index like VTSAX (10 year returns around 13%.) Nothing is guaranteed or "continuous" though. This is less risky than investing in a single, private company that probably has little liquidity.

Looking at 10 year returns isn't good enough because we have been in a bull market for over ten years. You need to increase the horizon to get more accurate returns

Re: Sneak peek at future of SaaS investing

#17

Post by icedchai »

fnord77 wrote: post #15
icedchai wrote: post #12

Earlier quoted context omitted.

Almost any tech heavy ETF such as XLK or VGT will get you there. 10 year yearly returns are over 15%. For less risk, you could do a total stock market index like VTSAX (10 year returns around 13%.) Nothing is guaranteed or "continuous" though. This is less risky than investing in a single, private company that probably has little liquidity.

> VTSAX the past 10 years, yeah. but the prior 10 years were much worse.

True. But do you think they were better for private tech companies? Maybe if you lucked out with the next Google. More than likely, you got a dot-bomb that lost 90% of its valuation and was sold for pennies on the dollar...

Re: Sneak peek at future of SaaS investing

#18

Post by tomkubik »

TheRealPomax wrote: post #13

Remember: Hacker News is not a financial service, and people upvoting articles about financial behaviour is not the same as financial advice. If it sounds too good to be true, it probably is, and was probably written by someone who mistook the luck of doing the right thing at the right time for a transferable skill.

Yes, big question if Buffer represents average return profile for "late-stage SaaS"... time will tell!

Re: Sneak peek at future of SaaS investing

#19

Post by buf »

toomuchtodo wrote: post #3
buf wrote: post #2

I see more and more investors looking to do this especially as a solo-founder of a bootstrapped small SaaS business. As I march towards $1M ARR, the savvy investors are looking for ways to be valuable to my business as opposed to me begging investors for the next round of funding in traditional VC-backed ventures. I would be very happy to share 15-20% if the value-add is strong enough.

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.

For this particular business, it's about unlocking certain levers for future growth. My SaaS has 300k+ users, mostly automated, and grows itself, but the product is positioned in a spot that draws quality issues that prohibits more premium users. The next level would be about attracting premium users.

Even that is achievable on my own if I put some effort into it, but I've been busy with another startup recently that's doing 20x my solo project. Also bootstrapped, but not entirely owned by me.

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