Tuesday, 11 May 2021

SaaStr

SaaStr

SaaStr Enterprise 2021 is May 26-27. Here Are The 5 Most Registered Session So Far.

Posted: 10 May 2021 10:13 AM PDT

SaaStr Enterprise 2021 is our next MEGA Digital Event and the line-up is incredible:

Registration has just kicked off, and the core sessions are FREE, so sign-up here.

Here are the 5 most popular sessions so far:

#1. “Lessons in Scale: Building the Foundation for High Growth with Qualtrics’s CEO”.  This should be a great session.  Register here.

#2. “Enterprise, SMB and Everything In Between: How to Build a Business that Scales With Your Customers with Zendesk’s CTO.”  Register here.

#3. “Improving Employee Performance in the Enterprise: What the Data Really Shows with Ally.io”.  Register here.

#4.”Bottoms Up vs. Top Down Selling in the Enterprise with ThoughtSpot’s CEO”.  This will be a great session, register here.

#5. “The Role of Partners in Scaling to $10B with ServiceNow’s CCO and VPP”.  This should be great.  Register here.

 

The post SaaStr Enterprise 2021 is May 26-27. Here Are The 5 Most Registered Session So Far. appeared first on SaaStr.

The One Best, “Secret” Hack to Getting Venture Funding

Posted: 10 May 2021 05:20 AM PDT

I am fairly confident there are at least 1,000 Substacks, 10,000 Medium posts, 20,000 WordPress articles, and over well over 1,000,000 Tweets on How to Get Funded.

It bores me personally to hear the same advice and topics again and again, but it’s an important topic.  Raising money for non-bootstrapped CEOs is one of their top 5 priorities.  Without venture capital, I’d be nowhere.  Both of my first two startups were venture-backed.  And it’s a weird, strange world that until recently was highly opaque.

Now having been on three sides of the table 🙂 — founder 3x, worked at someone’s VC firm, investor with own funds — I’d like to take a moment to boil down all the possible advice I could into one learning:

The Highest Chance You Have to Get Funded is When the VC Already Wants to Invest Before The First Meeting.  

Before you’ve even Zoomed or met them.

Trust me.  VCs claim to “meet” 1,000 or more start-ups a year.  But that’s not really possible to do for real.  No one can take 1,000 Zooms and coffee meetings.  Not really.  They can flip through 1,000 emails, delete them, and shake 1,000 hands maybe.  But it’s all just too many.  So as a CEO/founder, you have to stand out.  And then of the, say, 100 potential investments a VC might take seriously … they know only maybe 10-20 are going to end up being in their sweet spot.  A deal they really want to do.

And while every VC looks for different things, at different stages … they know what they want to fund, at least usually.  It may be a repeat, successful founder.  It may be traction in a very specific space.  It may be very certain metrics.  Etc.

So when they “hear” of a potential investment is right in their sweet spot the right way — they make that meeting happen.  That one doesn’t take 90 days to schedule. It gets scheduled that week, or even, that day.  That deal gets brought to the partners’ Monday meeting the next week.  They move when they see a hot prospect.  Just like a great sales rep does.

Ok, you say, but how can I possibly make a VC want to fund me before I even meet her or him?

The following paths work just fine:

  • A super warm intro from an amazing founder / seed investor.  If one of the top CEOs a VC has invested in says “you have to meet Diane, she’s the best founder I’ve met this year” –you take the meeting.  That day.  Similarly, VCs invest in stages.  If the top VC one stage earlier (e.g., Seed if you are Series A) says “this is my best investment” — you take this meeting.  Now.
  • Amazing PR, press, and customer engagement.  If everyone on Twitter or ProductHunt or Stackoverflow or Hackernews or anywhere is saying you are the next amazing tool, that gets folks’ attention that are interested in your space.  Mediocre PR doesn’t work.  But “everyone saying good things” for real, works well.
  • An epic cold email.  Cold emails do work — if they sell the entire pitch on their own.  Craft a no more than 40-line email (or so) that encompasses the entire pitch.  Traction, metrics, team, logos, and vision.   All of it.  Yes, you can do this in one email that isn’t a ramble.  If that email is so compelling you look like a Top 1% opportunity, you will get the meeting.  Almost no cold emails meet this bar.  Maybe only 2%-3% do.  But when they do, they can really work.  2 great examples here.
  • You are super hot.  This isn’t you, yet, not most of you.  This is more relevant for later stages.  Everyone wanted to meet with Slack, UiPath, etc. — once they took off.  But the one thing that is relevant to you is they all already want to invest in Slack even before the meeting.  You create similar energy and momentum, just at an earlier stage, and the same thing will happen.
  • Sequoia, Andreeesen, etc. is going to give you a term sheet.  This is hard to play for 99% of folks, but it does mean other VCs, at least some, will want to take the meeting. 🙂  Just don’t overplay this if it isn’t true, or if the social proof is mediocre.

Note I added “super”, “amazing” and “epic”.  You have to stand way, way out.

This is one reason YCombinator is so, so successful.  When 500+ investors video into each Demo Days, they already are assuming there are 1-2 companies they will want to invest in.   VCs think it’s just their job to find those 1-2.  That is something special.  No other accelerator has every investor coming assuming there is one deal they should do.  The investors literally, truly come with a checkbook.  They already know they want to invest “before the meeting”.

If you can reproduce that, you will get all the meetings you want.

Remind Me, Which Should We Invest in Again?

Now flip this around.  What if you just “ask for coffee”?  What if you “want to pick a VC’s brain”?  I guess that works sometimes.  But what are the odds that makes the VC want to invest before the meeting?  Zero.

Personally, every single investment I’ve done I wanted to invest before the first meeting.  So maybe I’m biased.

But I can tell you it certainly works on me.  And almost all my traditional co-investors, too.

(note: an updated SaaStr Classic post)

The post The One Best, “Secret” Hack to Getting Venture Funding appeared first on SaaStr.

How to Back Into a Fair Valuation For Your Seed Round (Or Later)

Posted: 10 May 2021 05:20 AM PDT

The hardest investment rounds to price are seed rounds.   They’re incredibly situationally dependent:

  • A founder that sold her last company for $400m or IPO'd might be able to raise a pre-seed round at $40m pre (not uncommon).
  • A founder with little proof points might be lucky to raise anything at all, and $2m pre might be very generous.

screen-shot-2016-12-15-at-9-17-54-am

All these pre-money numbers are crazy in the early days because they are all too high based on any sane metrics. There is no way your super early start-up is even worth $1m in the "real world," let alone $6m! A few thousand lines of code and 1 paying customer is not worth $2m in any rational world. Unless. It's a hint of something great to come.

Having said that, if you want to dig a layer deeper, what's really "fair" is a price 1/3rd or less of what the next round investors will pay.

So let's say you do raise money at $6m pre. Let's call that $7m post. And let's add in another $1m for dilution after the round, and call it an effective $8m post. Can you raise another round at $24m+ pre, say $30m+ post, in 18 months or less?

If so, $6m is fair.

If not, it's a bad deal. It's way too much risk — versus the next round. Anyone logical would wait and invest later.

This is why so many seed rounds are terrible deals. You're much better off waiting for the next round, if the price is only 20%, 50%, even 100% higher. Once a ton of risk has been taken out.

If you back into this 3x for the next round for seed, 2x for the next round at Series A and beyond math … you'll end up with a fair deal all around, that also accounts for risk.

(note: an updated SaaStr Classic answer)

The post How to Back Into a Fair Valuation For Your Seed Round (Or Later) appeared first on SaaStr.
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