The Latest from SaaStr: Why Now is a Great Time to Raise Seed Funding

So now is simply a terrible time to be raising growth stage venture capital.  With the BVP Cloud Index down 40%+ from a year ago, and many of the top Cloud leaders trading for as low as 5x ARR, it’s just hard to justify a later stage $300m-$400m valuation round these days, let alone a true unicorn round.

Look, venture is a mess today. 

Crypto investments are going bankrupt.  Unicorns that looked like sure things a year ago are now running out of money.  Board meetings are endless drama sessions.  And there are too many founders looking for bridge financing, and not enough bridge financing to go around. 

And yet, these are still very good times to raise a seed round.  If … you are capital efficient.

Cloud-driven commerce has transformed how we use technology, and we expect it to do as much. But the SaaS-savvy customer of today does not fit into the current rigid, outdated sales process. SaaS companies must adapt and develop a future-proof sales model that delivers answers and solutions to what customers are looking to buy. 

Evan Powell, Co-founder at Reprise, and Rudina Seseri, Founder and Managing Partner at Glasswing Ventures, decode how to build a high-converting sales team that syncs with modern buyer needs.

So look at the chart from Docebo above. 

Docebo is in one of the most competitive spaces of all in SaaS — Learning Management Systems.  There literally are 100+ vendors, most of whom look essentially identical.  But they kept at it, driving up the ACV, adding more and more functionality, and hit $140m+ ARR with a $1B+ IPO.  All while spending less than $14m.

And interestingly — they never had a year of 100% growth after $10m ARR.  Very solid 60% or so growth many years, but never a single year of rocketship growth.

They still got to a true $1B IPO valuation, even in tougher times.

Competition can really be tough in SaaS.  They can be in every deal, put pressure on pricing, they often raise more than you, and can create endless stress.

But … can competition kill you?

There's already 638 of your fellow SaaStr community members signed up to join us at SaaStr Europa 2023, taking over the Tobacco Docks in East London on June 6-7. 

With our year-over-year attendance tracking at nearly triple this event will be sure to sell out by the time we reach the summer. 

Don't miss 2 days of content, networking, matchmaking, and so much more - all dedicated to help you scale faster with less stress and more success. 

Already confirmed speakers include:

• Diego Dugatkin, CPO, Box
• Spencer Kimball, CEO and Co-founder, Cockroach Labs
• Nowi Kallen, Managing Director, Salesforce Ventures
• Joe Thomas, Co-founder and CEO, Loom

Grab your tickets before prices go up on 31 of January.

One of the most important operating metrics in your SaaS start-up, if you aren’t predictably cash-flow positive, is your Zero Cash Date (“ZCD”).

You hear a lot about SaaS metrics, but this one doesn’t often come up.  It should, and it should be very near the top of the list of core metrics.

Your Zero Cash Date is the most likely date, at your current spend/burn, that you will run out of cash.

Many start-ups don’t track this religiously, or with 100% certainty, and just as importantly, don’t always share it with every single one of your investors — and your employees.  As you can see in the survey above, it looks like most start-ups don’t really share their ZCD, or at least don’t fully share it.

You should. 

If they really don’t want you to leave the board — they will tell you.

It’s always awkward when ex-founders, ex-CEOs, etc. remain on the board, at least 90% of the time.  The only general exception is a CEO that partially retires once a startup is fairly big to an active chairperson role.  But even there, sometimes it can be a distraction:

• First, things will change. As you leave your operating role, the company will a year or two be very different from the company you worked out.
• Second, the Board is the CEO’s boss. Having an ex-colleague as your boss is full of issues and micro-conflicts.
• Third, it creates tension & distractions all around. Even if you don’t see it. This helps no one.

This edition of the SaaStr Daily is sponsored in part by Brex

Brex is reimagining corporate cards and spend management to help founders get fast access to 10-20 times higher credit limits, unlimited virtual cards, a no-fee business account, and built-in software. 

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