Amanda O.

Your official 2024 SaaS benchmarks cheat sheet ⤵⤵ We teamed up with High Alpha, Paddle and OpenView to survey 800+ SaaS companies & the report dropped *today*. Here's what GOOD and GREAT looks like by ARR band: EARLY STAGE (<$1M ARR) - Growth: 100% (good), 250% (great) - NRR: 100% (good), 110% (great) - ARR per FTE: $70k (good), $100k (great) ^Top quartile growth rates & ARR per FTE are up in a big way year-over-year EARLY GROWTH STAGE ($1-5M ARR) - Growth: 50% (good), 115% (great) - NRR: 100% (good), 110% (great) - ARR per FTE: $120k (good), $185k (great) GROWTH STAGE ($5-20M ARR) - Growth: 30% (good), 60% (great) - NRR: 105% (good), 120% (great) - ARR per FTE: $150k (good), $215k (great) ^The market has stabilized at $20M & beyond. The downside is that it's stabilized at a lower level than prior years. I unpacked my top takeaways in today's Growth Unhinged: https://lnkd.in/ezDdMupe Read the highlights then don't miss the full report (see the comments 👀). Hope you find it useful 🙏 #saas #ai #benchmarks

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Investors are pattern matchers. Metrics are a way to pattern match. Try to get your company metrics to fit the patterns if you can. 😁

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The average successful exit for a bootstrapped SaaS company happens around the $5–10M ARR mark. Contrast that with VC-backed companies, where anything less than a 10x return is often considered a "failure." And while slow and steady wins the race for some, let's be realistic here — how long will it actually take? Years of grinding, reinvesting every penny, and hoping for that shmillion dollar outcome. So, here's a thought: 𝗺𝗮𝘆𝗯𝗲 𝗮 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗯𝘂𝘆𝗼𝘂𝘁 𝗶𝘀 the outcome you should be optimizing far all along.... Here's why: First off, it makes sense. You get immediate value realization.   No need to wait years for a 𝘱𝘰𝘵𝘦𝘯𝘵𝘪𝘢𝘭 IPO.   There's a clear and high probability off-ramp. Unlike VC, which often dilutes your control, strategic buyers actually want your expertise and want to preserve your vision. You might even get to lead your "baby" into its next growth phase. This means lower stress, higher satisfaction.   No more sleepless nights worrying about making payroll or prepping for the next funding round. Skip the exhausting cycle of pitches, term sheets, board meetings, and no pressure for unrealistic growth either. You get to focus on what you love—building and improving your product. Plus, you get to tap into the buyer's resources, distribution channels, and customer base. Your product could scale faster than you could ever do on your own. But what about the unicorn dream?   For every 1x unicorn, 1000x startups never make it big. Strategic acquisition offers a bird in hand—tangible success you can bank on. The real question here is: 𝘄𝗵𝗮𝘁'𝘀 𝘆𝗼𝘂𝗿 𝗲𝗻𝗱 𝗴𝗮𝗺𝗲? Do you want to build an empire? Create something valuable and move on to your next adventure? Is your goal financial security? Or do you just like the constant hustle of startup life? The choice is yours to make. If you're a SaaS founder with $40k+ MRR and curious about what's possible, let's talk! For the love of the game 🏴‍☠️ ⚡ #Fundraising #Investing #VentureCapital #Startups 

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When making an investment decision the starting point for me is always the same: the founder. Not the market. No matter what stage, industry, or existing investment history – conviction in people is critical. Since I joined Index in 2008, I’ve seen a ton of change in venture. New VC entrants, shifting market dynamics, and major technological progress. Yet the core of the craft has remained the same - the focus on identifying outlier founders building the next outlier company. What defines an outlier founder? A unique combination of imagination, operational excellence, and high-quality decision making. I saw that in Olivier Pomel & Alexis Lê-Quôc at Datadog, Assaf Rappaport, Yinon C., Roy Reznik, & Ami Luttwak at Wiz, Joshua Motta & John Hering at Coalition, Inc. and other exceptional entrepreneurs. It was a pleasure to chat with Harry Stebbings about the complexities of VC and dig into key learnings from my time as an investor and board member on the latest 20VC episode. Thanks for having me, Harry!

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Venture incentives are deeply misaligned right now. Many LPs stick with big-name funds for ‘buying IBM’ reasons, even when their size limits returns. Leaders of those firms can rake it in on management fees, while most big firm investors chase hot deals to climb the ranks. These incentives prioritize short-term wins over the long-term results that actually drive returns. Venture is a decades-long game—yet most people are thinking in years, not decades.

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This Strategy Generated Over $500M in Deal Flow  Steal my simple 3-step method 🤑 The holy grail for a business buyer is Off-Market Deal Flow. Imagine no middlemen, brokers, marketplaces, or investment bankers. You have a proprietary list of people looking to sell their businesses. When building off-market deal flow buyers make the same mistake... Research from a leading firm managing millions of leads reveals a striking truth: Only 15 out of 100 leads convert within the first 90 days. Just 15%. This means: - 85% of potential deals are being overlooked - Most buyers are fighting over the same 15% - You're likely missing out on the best opportunities But there's another option... The "18-𝗠𝗼𝗻𝘁𝗵 𝗔𝗱𝘃𝗮𝗻𝘁𝗮𝗴𝗲": Extend your timeline to 18 months, and the numbers shift dramatically. 𝗡𝗼𝘄, 50 𝗼𝘂𝘁 𝗼𝗳 100—50%—𝗮𝗿𝗲 𝗿𝗲𝗮𝗱𝘆 𝘁𝗼 𝘀𝗲𝗹𝗹. Here's my proven 3-step method that generated over $500M in deal flow: Encourage Engagement Offer valuable resources: reports, scorecards, quizzes—anything to get sellers to raise their hands. Nurture Relationships Use newsletters and consistent follow-ups to stay connected for 18+ months. Be Ready When THEY Are Make it effortless for prospects to reach out when they're prepared to act. The result? - A proprietary list of motivated sellers - No middlemen or brokers - First pick of the best deals The best part, this strategy works across ALL business sectors. Are you ready to play the long game? ___ P.S. Whenever you are ready here to learn More About Acquisitions: Join my FREE weekly newsletter 𝗧𝗿𝘂𝘁𝗵 𝗔𝗯𝗼𝘂𝘁 𝗔𝗰𝗾𝘂𝗶𝘀𝗶𝘁𝗶𝗼𝗻𝘀 to hear real stories about buying and selling companies, without the hype or B.S. Learn from our mistakes and model our wins so you can get to your goals faster. ⬆️ 𝗦𝗰𝗿𝗼𝗹𝗹 𝗨𝗽 + 𝗖𝗹𝗶𝗰𝗸 "𝗩𝗶𝘀𝗶𝘁 𝗠𝘆 𝗪𝗲𝗯𝘀𝗶𝘁𝗲” ⬆️ ___ Like this post? Like 👍 | Comment ✍ | Repost ♻️ . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Very informative view on deal structures for exits.

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Simplifying the Asset Purchase Agreement (APA) in Micro SaaS Acquisitions // What is an APA? - Buyers acquire specific assets, avoiding unwanted liabilities. - Common in Micro SaaS to select valuable assets and minimize risks. // Key Components: - Purchased Assets: Codebase, customer lists, etc. - Liabilities: Buyers avoid seller’s debts. - Payment: Often a mix of cash, seller notes, and earnouts. Understanding the APA helps guide smoother acquisitions. Here if any Founders are considering an exit...

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KNOW YOUR REAL BUSINESS ECONOMICS • GAAP Revenue • Cash Flow • Cash • Contribution Margin • CAC • CAC Payback FUNDRAISING: PRESENT & SUBSTANTIATE FINANCIALS • Investor needs to know what your forecasts are • They need to believe them David Weiden, Khosla Ventures

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AI could kill ARR as we know it. And, in doing so, it could kill SaaS metrics as we know them ⤵ Annual recurring revenue (ARR) is the building block of SaaS metrics. And it's the basis of SaaS valuation multiples. It's (usually) high margin, predictable and growing. Which means SaaS companies are (usually) on track to become highly profitable at scale. AI throws this off. What's not classic ARR: - Charging per successful AI resolution (Intercom, Zendesk) - Charging per credit used (Clay) - Charging per task completed (11x) - Charging per photo edited (Imagen) - Charging per demand package generated by AI (EvenUp) - Charging per conversation (Salesforce) We're moving away from charging for *access* to software and to a model of charging for the *work delivered* by AI & software. This might mean greater volatility. Variable margin profiles. Seasonal revenue. Project-based, non-recurring use cases 🤯 Welcome to the new "ARR": annual *re-occurring* revenue. Some implications of this shift: 1️⃣ Spending much more time unpacking the components of revenue. 2️⃣ Moving away from ARR multiple valuations to looking at last 12 month revenue (or, even better, last 12 month margin $). 3️⃣ Looking much more closely at revenue concentration -- I suspect there will be a far wider variance between the smallest & largest accounts. 4️⃣ Measuring newer things like "time to ramp" and "share of wallet" as predictors of future success. --- I unpacked this shift with CJ Gustafson in his Run the Numbers podcast (check the comments). And shoutout to Dave Kellogg for a great keynote on this topic 🙏 🎁 For more insights on SaaS growth & pricing, check out Growth Unhinged — my free weekly newsletter: https://lnkd.in/exTbjKaM #ai #saas #finance

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🔮 Small funds perform BEST: 91% of the BEST performing VC funds in the last 10 years have been under $250m in size. 73% are under $100m. Size does matter. Small funds are worthy VC allocations that fit the risk/reward profile. The next time you go to reject a fund because it's too small, reconsider. #VC #venturecapital

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Why do people want to be VCs? I asked Claude to generate the fees earned by a GP of a $100M fund that generates 10% IRR over a 10 year fund cycle. That GP may make $45M+ over 10 years for delivering worse returns than S&P 500.** S&P 500 has returned 10.628% annualized over the last 100 years (assuming dividends are reinvested). - 5-year average (as of July 2024): 14.873% - 10-year average (as of July 2024): 12.864% - 20-year average (as of July 2024): 10.473% - 30-year average (as of July 2024): 10.733% The upside of being a VC while delivering results that are not great is insane. **practically, it's not that simple, and it's hard work

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Common misconceptions among founders when it comes to SaaS valuations: 1. ARR or Revenue multiples are the primary determinant of a SaaS company's worth. 2. You get the best idea of your company's valuation by comparing it with others (public multiples, competitors, SaaS with similar metrics,...). Unfortunately, it's not that simple. Your company has an intrinsic value, while multiples just serve as comparative tools. They reflect the intrinsic value of a company, not the other way around. Read more about it in my latest saas.wtf article! 📬 Here’s a sneak peek of what you’ll learn: • Pitfalls of relying on ARR or Revenue multiples • Understanding the intrinsic value of a SaaS business • Influential factors in determining this intrinsic value Enjoy reading! ✌️

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Venture Studio model to build cash flow companies? It can beat VC IRR with fast cash return. 👇 Let’s unpack a hypothetical studio focused on building consulting companies. How might a startup studio that builds consulting firms work? Let’s start with a model of a single firm. The studio invests $500k for 50% share of the profits (founder salary included in costs), providing dedicated support in building, launching, and growing the firm. The goal is to become cash flow neutral in 18 months. If not, assume failure and zero funds are returned. Assume $1M in revenue by the end of year 3. Assume a profit margin of 60%. Assuming success and ZERO growth above the $1M in annual revenue, from year 3 on, the studio would receive $300k for it’s share of the $600k in profits. IRR for the 10 year span? 36% What happens if you factor in an annual growth rate of 25%? At the end of year 10, the consulting firm would have an annual revenue of $4.768M, profit of $2.861M, a distribution that year of $1.43M for an IRR of 49%. ❗49% IRR❗ But this is for building ONE firm with 100% success rate. Let’s apply the studio model and add in a failure rate. The studio raises a $5M fund to build 10 companies in 3 years on the same terms as above. Let’s keep the 25% annual growth with a year 10 revenue of $4.768M. Assuming a failure rate of 50% that return no money. Let’s assume 3 companies created in the first year with 2 surviving, 4 companies created in the second year with 1 surviving, and 3 created in the third year with 2 surviving. Returns to the studio begin in year 3 at $300k and growing to $5.836M in year 10. Total IRR? 25%. ❗25% IRR ❗ Interesting? 25% is on par with VC funds. Better than average VC fund returns too. Now imagine a more realistic $250k to start each company -> Double the IRR to 50%. Now Imagine using this approach with a focus on industries, demographics, or geographic areas -> Targeted Economic Development. Now imagine this with an evergreen investment fund to cycle the returns and continue building consulting firms with what would amount to a lucrative annuity payment to investors. Focusing on the VC path is not the only option for venture studios. 🤫BTW. This type of studio has been built and operated before. Successfully. If this model is of interest to you, let me know in the comments! #startupstudio #familyoffice #lp #entrepreneurship

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Here’s a concise summary based on the "Extend Runway" document by Sequoia: Extending Your Runway: Key Takeaways for Founders - Understand Your Runway: Runway = cash balance divided by monthly burn rate. It’s crucial to calculate it accurately, accounting for debt and future cash outflows. - Set Realistic Goals: Figure out how long it’ll take to reach your next milestone (e.g., next funding round or cash flow positive) and aim to have 12 months of runway beyond that. - Break Down Your Costs: Dive deep into your P&L. Identify where your losses come from (gross margin vs. operating expenses) and understand what’s efficient vs. wasteful spending. - Make Hard Decisions: Reducing burn may require tough decisions, like cutting staff or increasing pricing. - Plan for the Worst: Hope for the best, but always have a contingency plan in case things go south. - Stay Focused: The sooner you execute on these actions, the better position you’ll be in to survive and thrive in the long run. Remember, it’s not just about raising money but about ensuring sustainability for the long haul. If you're diving into the investment world, keen on joining a forward-thinking community of investors, here's your chance. 💼🌟 Join our Inovexus Deal Club today by commenting 'DEAL CLUB' below! Dive into a network where smart funding meets groundbreaking ideas ✨ #startups #entrepreneurship #venturecapital #investing #finance #crossborder #inovexus #startup #VC #earlystage

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I've worked with bootstrapped founders navigating exits AND been on both the buy and sell side of multiple transactions — The best deals are won or lost long before you enter a formal M&A process. Your leverage isn't built in the negotiation room — it's built in your market. Why? Because acquirers aren't just buying your MRR... they're buying your moat. And the strongest exits I've seen are from those who build deep, defendable value in a niche vertical rather than chasing a large market share. So, while building that moat should be your main focus to secure a premium exit, knowing how to navigate the M&A process is valuable when the right opportunity comes along. I've attached a detailed M&A prep guide to help you get started👇 For the love of the game 🏴‍☠️ ⚡️ #microsaas #acquisition #startups #bootstrap 

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Valuation multiples step down at each new round …and that’s completely normal 👀 These drops are not a sign of weird times or a broken system ARR multiples are supposed to go down over time Because eventually they have to trend to the public multiples ✅ Now… As long as your revenue stays on the venture scale path → your revenue multiples will keep dropping → but your overall valuation will go up So if you’re going to raise capital… I think it’s important to understand that the multiple you raise at isn’t what you’re actually worth TODAY ❌ It’s the multiple you’re worth assuming you hit those FUTURE venture scale expectations (once you hit $1M ARR, can you get to $100M ARR in 7 to 10 years?) Which basically means that once you hit $1M ARR... You’re growing at 10% month over month for the next 24 months straight before starting to slow down to 2x year over year growth So even though Seed to Series A sees the biggest drop in multiples, that 10% mom growth will still drive up your valuation ----------------- But here’s the thing… If you’re growth slows to less than 2-3x between Seed and Series B → or sub $10M in ARR Your multiple doesn’t just drop to the Public Index (currently at 6.4x) It’ll actually fall below that index (closer to a 1-3x multiple) Because the acquirer is now arbitraging between they pay for you (1-3x multiple) and what they’re worth (6.4x multiple) ----------------- So what can you do? Focus on the milestones that’ll fuel your growth → instead of fundraising rounds or paper valuations And keep your cap table as light as possible until you’re ready for step 3️⃣ 1️⃣ Problem Solution Fit 2️⃣ Go to Market Fit - unlocks Series A 3️⃣ Scale PMF #1 - Series A use of funds 4️⃣ Scale PMF #2 -- ♻️ Repost to help a founder in your network Click 'visit my website' at the top of this post to register for my free Unlock your Series A session on how to navigate VC expectations in this market

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Great presentation of the laws of gravity in Venture Capital and startups

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Valuation multiples step down at each new round …and that’s completely normal 👀 These drops are not a sign of weird times or a broken system ARR multiples are supposed to go down over time Because eventually they have to trend to the public multiples ✅ Now… As long as your revenue stays on the venture scale path → your revenue multiples will keep dropping → but your overall valuation will go up So if you’re going to raise capital… I think it’s important to understand that the multiple you raise at isn’t what you’re actually worth TODAY ❌ It’s the multiple you’re worth assuming you hit those FUTURE venture scale expectations (once you hit $1M ARR, can you get to $100M ARR in 7 to 10 years?) Which basically means that once you hit $1M ARR... You’re growing at 10% month over month for the next 24 months straight before starting to slow down to 2x year over year growth So even though Seed to Series A sees the biggest drop in multiples, that 10% mom growth will still drive up your valuation ----------------- But here’s the thing… If you’re growth slows dramatically between Seed and Series B → or sub $10M in ARR Your multiple doesn’t just drop to the Public Index (currently at 5.7x) It’ll often fall below that, often closer to a 1-3x multiple (or more likely a 4-6x EBITDA multiple) ----------------- So what can you do? Focus on the milestones that’ll fuel your growth → instead of fundraising rounds or paper valuations And keep your cap table as light as possible until you’re ready for step 3️⃣ 1️⃣ Problem Solution Fit 2️⃣ Go to Market Fit - unlocks Series A 3️⃣ Scale PMF #1 - Series A use of funds 4️⃣ Scale PMF #2 -- ♻️ Repost to help a founder in your network Click 'visit my website' at the top of this post to register for my Seed to Series A session -- *Note that a huge jump in Series D & E+ valuations in Q2 2024 are based on a low number of deals (35 and 19) compared to Seed (492), Series A (415) and Series B (185) skew the multiples for those rounds much higher this quarter

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