The Latest from SaaStr: Have You Visited Your Top 5 Customers This Year?

A ways back on SaaStr, we wrote an important post on your customer success leaders —

The 5+2 Rule.

That every member of your CS team needs to visit 5 customers in person a month — and be issued 2 customer badges a year (because they visit in-person so often).  At least the ones that manage slightly larger accounts ($20k+).

It’s an even better rule to follow today, now that we know the best customers in SaaS literally last decades.

It definitely can vary based on what type of investor.

But for venture-backed start-ups raising from more traditional funds (the ones you’ve heard of), here are some rough rules:

Seed VCs would like to buy 10%, sometimes 15%, if they can. They often “settle” for a bit less.

• Series A VCs would like to buy 20%
• Series B VCs would like to buy 15%
• Series C VCs would like to buy 10%
• Series D VCs would like to buy 5%, or at least, be able to deploy at least $20m-$30m

These ownership percentages are pretty rough guidelines, but they are based on general rules about what it takes to “return a fund” for Series Seed through Series B, and to at least return 20% of the fund for Series C and later deals.

And if a VC truly believes a deal will be a decacorn, they can take a bit lower ownership if they really truly believe it’s a generation investment. 

But too small an ownership stake, and it’s just too hard for almost any investment to return enough absolute capital to “return a fund”.

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

Secureframe makes it easy to get SOC 2 compliant. With guided workflows and one-click integrations, the entire process is automated.

Not all startups follow the same trajectory for getting off the ground. Some stumble into the world of entrepreneurship like DoNotPay founder Joshua Browder did.

As a self-proclaimed accidental entrepreneur, Browder shares a few unconventional ways to scale your company.

The DoNotPay journey started six years ago and has led to many unconventional lessons that go against the popular wisdom of starting, scaling, and distributing a product. 

So I’ve written pieces of this post before, in how to best manage your investors, if for no other reason than to increase the odds they write another check.

But I thought with so much change in the world, so many folks looking to stretch their runway, and with so many SaaS companies needing to fundraise in the next 9-12 months in a much changed and far more challenging fundraising environment …

I thought I’d put together a quick Basic Guide to Building Trust With Your Investors.

While a lot of this is basic, most founders don’t do most of what’s on this list.

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

Your business can thrive with agile and innovative solutions to help automate business processes to scale your business. SAP Cloud ERP is at the core of making these capabilities come to life and helping your business grow.

It’s here! We’re so excited to announce our launch speakers for SaaStr Europa 2023 in London.

Join us on 6-7 June at the Tobacco Docks to learn from the leaders of UiPath, Rippling, Zapier, Bill, Braze, Loom and more! Check out the detailed agenda here.

For 2 days, more than 75+ sessions and 100+ expert speakers will be sharing their best practices on scaling, revenue, profitability, venture and so much more.

And the best VCs from the best VC firms will be everywhere, and also doing mentorship sessions and meet-a-VC sessions to help you learn.  From Point9 to Accel to Index to 20VC and so many more.

There will be over 3,500+ SaaS and Cloud professionals joining us there in person. Will you?

Get your ticket now and get a front-row seat when SaaStr comes to London.

Valuations in venture have never varied more in SaaS than now.  As a really rough metric, we’re back to anchoring about 10x ARR.  The very best startups will be able to raise at higher than 10x ARR.  The rest may get offers below 10x ARR. After all, the average public SaaS company right now trades at about 6x ARR.

But it’s not quite that simple. There is one common factor, that founders know, but often lose track of in their pitch: every VC, at any stage, is looking for outliers. No matter the price or how early or late.

Your pitch, your team, your metrics, your market position, your vision, your TAM, your everything, should honestly and transparently but aggressively and positively show how you can be an outlier.

It is hard to make money as a VC, as odd as that may sound. You generally need several unicorns per fund, and 1 per year, and often even a decacorn per fund, to truly do well.

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