Volume and Choice drive down Startup SaaS M&A Multiples.

SEG: 1Q19 SaaS M&A Update, via http://softwareequity.com/research/ SaaS multiples of venture-backed SaaS Startups are driven down by volume and choice. Tom Tunguz has written a lot about SaaS multiples, specifically about Where are SaaS Companies Priced After the 2018 Correction. We are getting a lot of inquiries from VCs, entrepreneurs, and LPs alike about pricing. … Continue reading Volume and Choice drive down Startup SaaS M&A Multiples.

VC Funds: $100 billion of dry powder in the Bay Area.

I was using Preqin to understand office locations of firms (institutional, family offices, and corporates) that are doing direct venture capital investments and are still seeking actively for new investments (collectively called "VC firms" below). Tobias Lam from the Preqin NYC office was kind enough to pull some back-end data on office locations for firms … Continue reading VC Funds: $100 billion of dry powder in the Bay Area.

VC Funds: Six months to first close on 40-60% of final close size.

This is the last post on this topic, but there were some more questions. It takes about 6 Months to Reach First Close This chart is showing the median per vintage year, together with the 1st and 3rd quartile boundaries and a green average line (with a horrible R-Squared of 0.0087). In a first close, … Continue reading VC Funds: Six months to first close on 40-60% of final close size.

VC Funds: First-Time Funds take a Median of 12+ Months to Raise.

I got a few questions on last week's post about the number of months VC funds are in the market before a close. Raising VC Funds in the US vs. Rest of World I was asked to look at different geographies: Months in Market to Final Close for each Year of Vintage broken down by … Continue reading VC Funds: First-Time Funds take a Median of 12+ Months to Raise.

VC Funds: A Median of 17 Months in Market to Final Close.

I get this question a lot: How long does it take to close a VC fund? We all know the anecdotes of marquee firms closing their funds within weeks. But don't forget that it often took 20 years to become a marquee firm and to build a robust platform and track record. So they closed … Continue reading VC Funds: A Median of 17 Months in Market to Final Close.

Fred Wilson’s “Return on Burn” (Excel Worksheet Attached)

Minimum valuations and their required revenue at fixed value-creation-multiple of cash consumption. In the last blog post I wrote about Fred Wilson's excellent insight into value creation relative to cash burn. I got a lot of questions about it so here is an Excel spreadsheet for you to download and play with -- let me … Continue reading Fred Wilson’s “Return on Burn” (Excel Worksheet Attached)

Pitch Clinic: VC Investments Need Hyper-Growth (D’oh!) — Excel Worksheet Attached.

Sounds obvious. So I am puzzled when I get pitches where the basic parameters of investment returns are not met.  There are many different types of venture capital investors. You should know which type of investor you are talking to. So here's one real example from last month: We're selling an edge appliance for IoT … Continue reading Pitch Clinic: VC Investments Need Hyper-Growth (D’oh!) — Excel Worksheet Attached.

Your fiercest Competition is your VCs’ Other Portfolio Companies.

If you believe you have a great startup, then I hope you have a great product. And, naturally, you will have competition. Gartner is not going to create a magic quadrant for a new huge market with only a single company in it.  Your product should be awesome. You should strive to find product-market-fit fast. … Continue reading Your fiercest Competition is your VCs’ Other Portfolio Companies.

The Flipside of Venture Capital.

[This post appeared first as a comment on Blue Dot Partners' blog, Perspectives. Philippe Bouissou wrote a post that resonated with me about The Two Types of Businesses.  There are two very different types of businesses. The motivations that drive entrepreneurs behind them are quite orthogonal. Both types of businesses are critical to creating a … Continue reading The Flipside of Venture Capital.

(Im)prove Yourself when Fundraising.

I saw two fund-raising pitches in the last two weeks with pseudo portfolios -- there must have been a recent book or blog post about it. Both had pseudo portfolios of seed rounds they've "seen" and "would have invested in if they had the money". The two pitches were very different. The first one was … Continue reading (Im)prove Yourself when Fundraising.