How to Build a Relationship With the Right VC Partner while Focusing on Your Business

CEOs of expansion stage businesses are flooded with emails from VCs. On one hand, it feels convenient but short-sighted to ignore all of them, as there may come a day when VCs will serve as helpful resources. But if a CEO took a call with every VC who reached out, they’d be missing their (and, frankly, the VC’s) most important priority: the business. So what’s the right balance that results in relationship building that will be fruitful down the line while keeping both eyes on the ball?

Only talk to firms that are a good fit for the business you’re building and can deliver on your needs.

Not all VCs are created equal. As a baseline, you can cut out VCs that aren’t willing to invest at your stage (i.e. whatever round you’re looking to raise next) and sector (e.g. B2B software, consumer internet, hardware, biotech, etc). Then,
Continue reading "How to Build a Relationship With the Right VC Partner while Focusing on Your Business"

How to Build a Relationship With the Right VC Partner while Focusing on Your Business

CEOs of expansion stage businesses are flooded with emails from VCs. On one hand, it feels convenient but short-sighted to ignore all of them, as there may come a day when VCs will serve as helpful resources. But if a CEO took a call with every VC who reached out, they’d be missing their (and, frankly, the VC’s) most important priority: the business. So what’s the right balance that results in relationship building that will be fruitful down the line while keeping both eyes on the ball?

Only talk to firms that are a good fit for the business you’re building and can deliver on your needs.

Not all VCs are created equal. As a baseline, you can cut out VCs that aren’t willing to invest at your stage (i.e. whatever round you’re looking to raise next) and sector (e.g. B2B software, consumer internet, hardware, biotech, etc). Then,
Continue reading "How to Build a Relationship With the Right VC Partner while Focusing on Your Business"

(Almost) Everything You Need to Know When Your Convertible Notes are Approaching Maturity

Editor Note: This article was first published on the SaaStr blog here. Congratulations: You pounded the pavement, brought in outside capital, and spent the last 12 months putting it to work to get your business off the ground. Now, your convertible notes are due to mature in six months and you’re wondering, what’s next? At this point, there are two possible outcomes.
  1. Your notes convert to preferred equity
  2. Your notes do not convert
Multiple paths lead to these two outcomes with each path carrying its own implications for your business. Let’s take a look at each path and the various obstacles you may encounter along each. Disclaimer: I am not an attorney, and I’m not familiar with the specific structuring of your notes. While you and your counsel probably worked with your note holders to create simple, easy-to-understand note agreements, make sure your counsel helps you fully understand the underlying
Continue reading "(Almost) Everything You Need to Know When Your Convertible Notes are Approaching Maturity"

(Almost) Everything You Need to Know When Your Convertible Notes are Approaching Maturity

Editor Note: This article was first published on the SaaStr blog here. Congratulations: You pounded the pavement, brought in outside capital, and spent the last 12 months putting it to work to get your business off the ground. Now, your convertible notes are due to mature in six months and you’re wondering, what’s next? At this point, there are two possible outcomes.
  1. Your notes convert to preferred equity
  2. Your notes do not convert
Multiple paths lead to these two outcomes with each path carrying its own implications for your business. Let’s take a look at each path and the various obstacles you may encounter along each. Disclaimer: I am not an attorney, and I’m not familiar with the specific structuring of your notes. While you and your counsel probably worked with your note holders to create simple, easy-to-understand note agreements, make sure your counsel helps you fully understand the underlying
Continue reading "(Almost) Everything You Need to Know When Your Convertible Notes are Approaching Maturity"

How to Get the IRS to Fund Your R&D

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
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The 2018 SaaS and Cloud Startup Report [Infographic]

Location is crucial in many aspects in life. The same applies to a surprising extent to starting a cloud or software business. The research team over at Crozdesk took an in-depth look at the SaaS and cloud economy, analyzing over 19,000 companies to look at funding availability, growth rates, overall ecosystem size, and more to figure out the top spots to start a SaaS business in 2018. The results were rather surprising. Check out the summary from the SaaS and Cloud Startup Report 2018 in the infographic below or get the full report here.

2018 SaaS Cloud Startup Report

Want the full report? Get the entire 2018 SaaS and Cloud Startup Report by Crozdesk here.

The post The 2018 SaaS and Cloud Startup Report [Infographic] appeared first on OpenView Labs.

GDPR: How US-based Startups Can Cope with New EU Data Privacy Laws

Changes to European data  privacy laws are coming – and they stand to impact your business. More specifically, starting in May of 2018, the EU’s General Data Protection Regulation (GDPR) will bring about some of the biggest changes to international data security laws in 20 years. US startups should know that (among other things) GDPR:
  • Applies to anyone processing personal data of EU residents, even if it happens outside the EU;
  • Gives EU individuals (data subjects) the right to access their data, correct it and have it deleted;
  • Requires companies to find a legal basis under the GDPR for processing EU personal data; and
  • Authorizes fines  for violations of up to the greater of €20 million or 4% of total revenue.
So how might GDPR impact your business, and what should you do to prepare? I sat down with Andy Wilson, Founder and CEO at Logikcull, an OpenView portfolio
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Private Equity is Your New (and often best) Exit Opportunity

Last year Salesforce went on a SaaS buying spree. The CRM giant gobbled up the likes of Demandware ($2.8B), Krux ($800M), Quip ($750M), Beyondcore ($110M) and at least eight other technology companies. This year, they haven’t made a single notable SaaS acquisition to date. Marc Benioff And Salesforce isn’t the only major strategic sitting on the sidelines. Oracle made nine acquisitions in 2016, including Netsuite ($9.3B), Textura ($600M) and Dyn ($600M). This year they’re down to only three according to data from Crunchbase. Likewise, IBM went from thirteen acquisitions last year to a measly four in 2017 (at the time of this article’s publication). This downturn is more than just an anomaly. While venture funding continues to flow to startups, strategic buyers have done 20% fewer deals, from 1,173 to 911, over the last year.MA tech deal activity Strategic buyers have hit the pause button for a few reasons. Some, like Oracle and
Continue reading "Private Equity is Your New (and often best) Exit Opportunity"

Private Equity is Your New (and often best) Exit Opportunity

Last year Salesforce went on a SaaS buying spree. The CRM giant gobbled up the likes of Demandware ($2.8B), Krux ($800M), Quip ($750M), Beyondcore ($110M) and at least eight other technology companies. This year, they haven’t made a single notable SaaS acquisition to date. Marc Benioff And Salesforce isn’t the only major strategic sitting on the sidelines. Oracle made nine acquisitions in 2016, including Netsuite ($9.3B), Textura ($600M) and Dyn ($600M). This year they’re down to only three according to data from Crunchbase. Likewise, IBM went from thirteen acquisitions last year to a measly four in 2017 (at the time of this article’s publication). This downturn is more than just an anomaly. While venture funding continues to flow to startups, strategic buyers have done 20% fewer deals, from 1,173 to 911, over the last year.MA tech deal activity Strategic buyers have hit the pause button for a few reasons. Some, like Oracle and
Continue reading "Private Equity is Your New (and often best) Exit Opportunity"

4 Traits of Fast-growing SaaS Companies

Editor’s Note: This article first appeared on VentureBeat here. You can find fast-growing software companies in almost any vertical, but there are certain characteristics they all share. To find out which of these features are most key, my investment firm combed through our 2017 SaaS Benchmarks data, which covers 300 SaaS companies ranging from pre-revenue to more than $20 million in ARR. Here’s what we found.

1. Fast growers are extremely efficient at acquiring new customers

As investors, we keep a close eye on customer acquisition cost (CAC) payback. This metric represents how long it takes, in months, to pay off the costs of acquiring a given customer on a gross margin basis. We use it as an indicator that a company has the right fundamentals in place to effectively ramp up customer acquisition. Despite how important it is to properly understand CAC payback, our data shows that companies consistently
CACY payback period
Sales Channel Mix
Retention Rates vs. growth
sales and marketing spend vs. growth
2017 SaaS Benchmarks
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