Maintaining net dollar retention over 100% is critical to the health of your SaaS business and getting a premium valuation. One easy hack to improve NDR is to include automatic price escalators in your annual contracts with customers. Our portfolio companies do this, and the automatic price increase upon renewal is anywhere from 5% to 10%. Even getting 5% or 3% goes a long way to improving net dollar retention metrics and generating more cash.

Our portfolio companies have had the following experiences with price escalators:

“We have a standard 5% increase. But so many companies want to strike that…

Most VC hate cold emails from entrepreneurs. Reasons vary: i) cold pitches are often poorly prepared; ii) skeptical VC will say to themselves “why couldn’t you find a warm relationship to fund this” or “why am I seeing this and not someone else;” iii) some VC insist that you actually go out and find a connection to intro you to them directly; and iv) VC are self-important pricks that want to feel like they’re top of mind for referrals for the best deals.

Well, at Blossom Street Ventures we love cold emails from entrepreneurs and my email is on our…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at sammy@blossomstreetventures.com, especially founders at all stages.

SaaS comps continue to be strong. Of the 102SaaS companies we follow, the average public SaaS business is trading at 17.6x revenue while the median is 12.7x. The gap between the average and median remains wide at 5.0x, meaning premium SaaS companies are really pulling outlier valuations. 57% of companies are trading at 10x revenue or greater. The data is below.

Negative EBITDA, positive cash flow. The median SaaS business had trailing twelve month revenue…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at sammy@blossomstreetventures.com, especially founders.

I just finished reading Strategies That Win Sales by Mark Marone & Seleste Lunsford. It’s worth a deeper read, and below are some of our favorite excerpts.

Support depends on complexity. “Organizations with highly technical products will require live support through distributors or in-house sales representatives, whereas those who sell less complex product sets may benefit from self-service channels.”

Make sure the sales team has a travel budget. “Face-to-face will always have more intimacy. …

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at sammy@blossomstreetventures.com, especially founders.

In 2017 we had our first zero at Blossom Street Ventures. I’ll withhold the name of the company, but I do want to share key learnings from that experience. Below is an autopsy of a dead company.

Build a product for one market. Our portfolio company built phenomenal technology but didn’t actually productize for a specific use case. The technology had many use cases and applications, but we failed to apply it to one single product and focus…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at sammy@blossomstreetventures.com, especially founders.

Cash efficiency is one of the most important metrics in SaaS. Since the revenue at SaaS companies is largely recurring, we measure it as ARR / net investment. Formulaically it’s revenue / [equity + debt — cash].

We did an analysis looking at cash efficiency of the 42 most recent publicly traded SaaS companies at the time they went public. Using the equation above (revenue/[equity invested + debt — cash]), we were able to observe the cash efficiency…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially founders.

It’s common to hear “SaaS has great margins,” but that’s not true. The margins in SaaS are terrible as the data below show. The table has 42 publicly traded SaaS companies with median revenue of $180mm meaning they’re well past the startup stage and margins should benefit from their scale and maturity. However, even though they’re past the high burn growth stage, the median operating margin is -21% as 32 of the 42 companies generate operating losses.

Additionally while the variable costs…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially founders.

Recently an investment banker named Tom Metz was kind of enough to share his book with me entitled “Perfect Your Exit Strategy”. It’s about going through an exit with an investment banker. Below are direct quotes I found most informative.

Plan for the exit. “Business owners should begin thinking about their exit strategies two to four years ahead of time.”

Sell when you’re growing. “The best time to sell is when the company is doing well and enjoying excellent growth and profitability…