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…

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.

Most SaaS companies burn cash as they grow, but what is the acceptable level of burn? We looked at the last 41 SaaS IPOs to find out. The data is below and shows that on median, SaaS companies have a revenue to burn ratio of 3.39:1. In other words, for every $1 of operating loss, SaaS companies on median generate $3.39 of revenue. The average is even higher, at 5.68:1.

A few observations:

Some are…

Who are the most successful VC in SaaS? To answer that question, we looked at the past 41 SaaS IPOs and who their major investors were. The list is below.

The best. Not surprisingly, Sequoia and Accel top the list with 6 each. August, NEA, and TPG have 3 each.

Lots of 2’s. Ten firms have 2 IPOs each. These include Vista, Benchmark, Thoma Bravo, Bessemer, Sapphire, and Tiger.

The rest of the firms shown have 1 IPO each. There were others with 1 each, but we stopped with our current list as we’re really looking for those firms with multiple SaaS IPO’s. Surprisingly, or maybe not surprisingly, Softbank only has 1.

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.