You shouldn’t regret raising from VCs. After all, no one forces you to raise venture capital. In most
Perhaps you should regret who you raised from, though.
Why no regrets in general?
Well, there are I think 2 basic rules for founders and VC capital:
- Raise it if you need it to get going. If you need it, no regrets. In my first 2 start-ups, I needed venture capital to get off the ground. Yes, there were conditions and dilution. But it didn’t matter. It was the only way to make it happen. It was binary. Required. So there should be no regrets here. I’d never have made a nickel or built either of my first 2 start-ups without VC capital.
- Raise if it’s cheap and low drama. If you don’t need more money, but the price is good, your burn is low, and the drama is low … Continue reading "How many founders regret raising from VCs?"
I think at $30k ACV, you’re in the range where being in Silicon Valley is worth the huge expense.
Silicon Valley / SF is incredibly expensive. Rents, salaries, and perhaps most importantly, turnover. I’ve invested in 5 French start-ups. SF costs 2x Paris, fully burdened. It’s crazy.
I think in 2018, it’s hard to justify a large sales organization in the Bay Area unless the unique expertise in SF is worth the cost.
Self-service, freemium SaaS, apps that are inexpensive — you can start a sales team in SF, but scaling is very hard. Reps are too expensive, the churn is too high, and the numbers just don’t work after the first 5–10 sales reps.
$30k ACV is probably the cut off. Here, you’re edging into a true solution sale. And having an experienced VP of Sales and VP of Marketing that know how to sell and market solutions is Continue reading "What’s the best (geographically speaking) sales organization for enterprise SaaS in the US at $1M ARR/$30k average deal size? Do we have to/should we meet to close?"
The two most highly valued private tech companies (outside of China) are Uber and Airbnb. Both also happen to be marketplace businesses, and their success has helped encourage a rush of VC investment in similar business models over the past several years. But despite all this investment, public comps for marketplaces remain far thinner than those for SaaS.
The two most highly valued private tech companies (outside of China) are Uber and Airbnb. Both also happen to be marketplace businesses, and their success has helped encourage a rush of VC investment in similar business models over the past several years. But despite all this investment, public comps for marketplaces remain far thinner than those for SaaS. Read More
Silicon Valley / SF has gotten incredibly expensive. Rents, salaries, and perhaps most importantly, turnover. I’ve invested in 5 French start-ups. SF costs 2x Paris, fully burdened. It’s crazy.
And sales teams have gotten particularly expensive, because they don’t quite scale the same way engineers do. You can pay great engineers a ton, eventually, because 1000s of folks can use the same software. But you really do need Y reps for every $X00K of new bookings. Sales gets more expensive as you add customers. Engineering generally goes the other way, if you are doing it right.
Why have sales teams gotten so exepnsive in SF? It’s not just salaries and bonuses. Those actually haven’t grown 2x in the past 5 years. But the fully burdened cost probably has grown 2x, because:
Each year the US government provides billions of dollars to innovative businesses for developing new or improving existing technologies, products, materials, and processes, under the Research & Experimentation Tax Credit (R&D Tax Credit) program.
The R&D Tax Credit is a general business tax credit under Internal Revenue Code section 41 for businesses that incur research and development (R&D) costs in the United States. The US R&D tax credit has been around since 1981.
Previously, the program would periodically expire and be renewed by Congress. Businesses wishing to include this in their long-term budgeting plans couldn’t count on the credit being around for certain.
But, in 2015, Congress made the R&D tax credit permanent as part of the Protecting Americans from Tax Hikes (PATH) Act of 2015 and also made key changes so that small businesses that are not profitable could benefit from the credit.
The R&D tax program can be
Continue reading "How to Get the IRS to Fund Your R&D"