Matt Schaar’s Post

In Part Two of our series on Verticalized SaaS, Accion Venture Lab's Matt Schaar, Devraj Hom Roy, and Michael Wolfe identify the key strategic and operational steps a vSaaS can take to improve its "north star" metrics. If you're an early-stage investor or founder seeking guidance on the tried-and-true methods that successful vSaaS companies like Toast, Mindbody, Procore Technologies, and others implemented on a pathway to long-term growth, this piece is for you! https://lnkd.in/g5QkCrcH

If you enjoyed our first blog on the metrics that matter for Verticalized SaaS then don't miss on the Part II of the series where my colleagues Devraj Hom Roy and Matt Schaar discuss the strategic and operational choices to improve these operational indicators. https://lnkd.in/g5QkCrcH

Last week, we shared the first part (1/2) of our perspectives on vertical SaaS (vSaaS), more specifically on which metrics define the performance of vSaaS businesses and outlining the benchmarks for each of these metrics. If you have not yet read the piece, give it a read here - https://lnkd.in/d94n2bgN This week we published the second part (2/2) where we call out certain strategies deployed by successful vSaaS companies like Procore Technologies Toast ServiceNow Zenoti and others that can be used to improve the metrics that matter. Read on to layer the numbers with the strats- https://lnkd.in/dPkmWFax Do reach out if you are building in the space or want to exchange notes / feedback on the perspectives. #fintech #verticaSaaS #embeddedfinance #investments

In Micro SaaS, tracking core performance metrics is crucial for growth and profitability. Here's a snapshot of the metrics we track and conclusions we drew from these metrics: // New Visitor Sessions: Our blog and social media channels have achieved a stable and significant level of output (4x blog posts / wk; 5x social). While there's no significant increase in new visitor sessions, trial signup and paid conversions have improved, implying better quality traffic // Trial Signups: We've seen a structural increase to ~48 in Q4'23, thanks to Google Search (aka SEO-optimized and relevant blog content), social (distribution across channels) and a refreshed ambassador program. // Trial to Paid Conversion Rate: This metric doubled, as measured against our year-to-date average, which is a HUGE win for us. However, we still have work to do optimizing onboarding(via segment-specific experiences based on most important outcome for a respective segment), which we're addressing in this quarter's OKRs. // Churn: We're continuing to see improvements here, which is wild and puts us in ~90% percentile against comparable benchmarks For more insights into how we're driving growth and optimizing performance in Micro SaaS, join us at Skaling Ventures. Link in first comment... Bridging the gap between Micro-SaaS Operators and Investors - @skalingventures #SaaS #microSaaS #startups #gtm #privateequity

What is the "Burn Multiple" and why should SaaS companies care? David Sacks - Craft Ventures first popularized the capital efficiency metric in 2020... Burn Multiple = Net Burn / Net New ARR 💡 the Burn Multiple was created to measure the capital efficiency of SaaS companies and place the focus on the BURN experienced to grow Net New ARR 👉 There are alternative ARR growth capital efficiency measurements to the Burn Multiple including: - Hype Ratio* = Capital Raised / ARR - Cash Conversion Score: Current ARR / (Total Capital Raised to date - cash) - Efficiency Score = Net New ARR / Net Burn * Hype Ratio was coined as the "Hype Factor" by Dave Kellogg in a kellblog blog post on March 22nd, 2016! 📅 Many capital efficiency metrics use "Lifetime Capital Raised" versus a company's total ARR to measure capital efficiency 🗓 the Burn Multiple is a good "period based" capital efficiency metric to understand how much cash was consumed to generate the Net New ARR in a period (month, quarter, year) 📏 Net Burn is the numerator component of the Burn Multiple and measures the cash burned in funding operations (not capital investments) 📏 Net New ARR is the denominator and measures the growth in ARR in a period including new logo ARR, expansion ARR, Down-sold ARR and Churned ARR 🦉 Benchmarks for capital efficiency metrics benchmark's are often presented by "company size" as investors expect the burn to decrease in context to ARR generated over time as a company grows - This is true for the Hype Ratio and Cash Conversion Score 💯 The original article highlighted the following Burn Multiple benchmark scale: 👉 Amazing = < 1x 👉 Great = 1.0 - 1.5x 👉 Good = 1.5 - 2.0x 👉 Suspect = 2.0 - 3.0x 👉 Bad = >3x 🎧 If you would like to learn more about how the Burn Multiple is calculated, misunderstood and/or used by both SaaS operators and investors check out the latest episode of SaaS Talk™ with the Metrics Brothers #b2bsaas #metrics #benchmarks

👉🏽 Embrace tension between daily deliver and scaling 👉🏽 Focus on what bring 'oxygen' to your customers 👉🏽 Downturns have historically proven to be the best time to start a company NEA's Hilarie Koplow-McAdams shares her wisdom, experience, and outlook with SaaStr in their new #SaaS investor series, Doubling Down: https://lnkd.in/gPMD3c9S

👋 DDVC INSIGHTS #5 is fresh off the press: 💧How much dilution is normal in each funding round? 🔒The incredible rise of SAFES and why convertibles are still valid 👔 Why is B2B sales suffering so much, and what to do about it? Founders who want actionable insights weekly subscribe to www.datadrivenvc.io

We now have a label for what we have been doing for a decade 😉 : “Vertical SaaS businesses don’t set out to fundamentally change the industries they operate in by replacing key parts of their workflows. Instead, they create the tools that enable business owners to do what they already do better. Whereas a disruptive company will often create a market for a new product or service ex novo, a vertical SaaS company improves upon an existing process… Enablement certainly doesn’t sound as sexy as disruption, but it is every bit as important. The products built by vertical SaaS companies directly touch the lives of millions of workers and drive billions of dollars in productivity gains" - Matt Castellini https://lnkd.in/dKnCEuqX

Insights: The most important startup research & reports at a glance🔥 If you're exhausted from skimming through newsletters, studies, reports, papers, social posts, and more, this is for you: One source to stay ahead on data-driven startup insights. Today: 💥User and Revenue Retention Benchmark 💥Unis and their Unicorn Production 💥Benchmarking Round Dilutions 💥SAFEs vs Convertibles 💥State of SaaS Sales 💥SaaS IPO Playbook We read, process, and digest all data-driven analyses we can find about startups and the wider ecosystem to surface the most insightful ones for you. Interested in more content like this? Join 20k+ subscribers of my free weekly newsletter www.datadrivenvc.io https://lnkd.in/drnJXqxK

5 Invaluable SaaS Lessons I Learned Along the Way 📖 The following post is written for our CEO Daan Schoofs 👇 Years of building and scaling SaaS comes with countless lessons. The following 5 immediately come to my mind when I reflect on the past years: 1. 𝐓𝐨 𝐬𝐨𝐥𝐯𝐞 𝐚 𝐩𝐫𝐨𝐛𝐥𝐞𝐦 𝐟𝐨𝐫 𝐚 𝐭𝐚𝐫𝐠𝐞𝐭 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞, 𝐲𝐨𝐮 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐤𝐧𝐨𝐰 𝐭𝐡𝐞𝐦 𝐢𝐧𝐬𝐢𝐝𝐞 𝐨𝐮𝐭. You want to 'live their problems', so immerse yourself in this group through long conversations, surveys, and observation. 2. 𝐁𝐞 𝐩𝐫𝐞𝐩𝐚𝐫𝐞𝐝 𝐭𝐨 𝐩𝐢𝐯𝐨𝐭. Your SaaS startup is often your baby, which makes it difficult to deviate from your original vision. However, you must be willing to pivot if necessary. 3. 𝐃𝐨 𝐧𝐨𝐭 𝐮𝐧𝐝𝐞𝐫𝐞𝐬𝐭𝐢𝐦𝐚𝐭𝐞 𝐭𝐡𝐞 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞 𝐨𝐟 𝐜𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐬𝐮𝐜𝐜𝐞𝐬𝐬. Listen to the needs, gather feedback, and prioritize processing it. Crucial to keep your churn under control and to improve your solution. 4. 𝐄𝐱𝐜𝐞𝐥 𝐢𝐧 𝐭𝐡𝐞 𝐛𝐚𝐬𝐢𝐜𝐬. Ensure that your acquisition method and lead follow-up are optimized first. Scaling SaaS isn't magic; it's hard work and ensuring that you excel in the basics. 5. 𝐇𝐚𝐯𝐞 𝐚 𝐬𝐡𝐚𝐫𝐩 𝐟𝐨𝐜𝐮𝐬 𝐨𝐧 𝐭𝐡𝐞 𝐭𝐢𝐦𝐞 𝐭𝐨 𝐯𝐚𝐥𝐮𝐞 𝐦𝐨𝐦𝐞𝐧𝐭. Establish a clear definition of this, so you know what you want to measure. Over several of these lessons, I've previously delved into cases. You can find them through the links in the comments 👇 What are the vital SaaS learnings you'd want to share with everyone? #venturebuilding #startupstudio #saas