One of the greatest pleasures of my job is meeting many early stage entrepreneurs every week. I estimate that about 70% of the companies I meet have SaaS or subscription-based revenue models. Because of this, and because a core area of our investment mandate is to invest in enterprise SaaS businesses, I wrote this piece, which was initially an internal guide to explain how to systematically analyze a company’s SaaS metrics.
What follows is a set of analytical methods that a VC may use during diligence or the general decision-making process.
This piece is intended for SaaS entrepreneurs raising a financing round. Understand how investors use SaaS metrics and how best to present them and you will increase the likelihood of getting venture funded. Continue reading
Much has been made of the potential of bitcoin, the currency, but the venture capital community is increasingly focusing on the commercial potential of the underlying blockchain technology. Perhaps more interestingly, executives at large and sophisticated incumbent financial institutions and financial technology companies that I have spoken to, by and large, do not dismiss the technology. They believe it has legs and are studying the technology with a goal to enhance their product offerings. In short, many incumbents have a blockchain strategy. The general spirit is that the blockchain is like the Internet; sure, some businesses were disrupted and rendered obsolete, but the Internet made most financial services and other industry products better.
While many questions remain, the blockchain’s core features – decentralization, speed, low take rates, and stability (i.e. hard to hack) – allow it the potential to reinvent many industries. Beyond banking and payments processing, there are fascinating commercial applications to capital markets, insurance, legal technology, advertising, and government, among others. In each industry, there is the potential for significant efficiency gains (i.e. current functionality delivered faster and more cheaply) but also disruption. What follows in this piece is a synthesis, in simple language, of some of the most exciting commercial applications of blockchain technology we may see across these major industries in the future. Continue reading
This week I had the privilege of being invited to speak at Harvard Law School in David Hornik’s term sheet negotiation class. David’s course is called Entrepreneurship and Company Creation and is one of the most popular elective courses at the school. Continue reading
As a venture capitalist, I meet companies seeking funding every day with projected revenue vastly exceeding current revenue. How does a VC ascertain the likelihood of you achieving your forward revenue number? How do you demonstrate to a VC that you can credibly hit your projections? Continue reading
When it comes time to sell your company, the decision to hire an investment banker is not always the best one. In the right circumstances, however, a banker can add value to your sale process. If you and your board have decided to hire a banker, it is in your advantage to ensure that the fee or engagement letter that you get in place is fair and even favorable to the company. At the same time, it is also important to properly incentivize your banker. Here are some suggestions: Continue reading