SaaS growth appears to slow as churn concerns rise


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Yesterday we explored what the SaaS world thinks about churn. A cohort of SaaS executives surveyed by Gainsight are expecting medium-bad churn (our take on their reported forecasts); select software companies will see booming demand; and the impact of churn won’t be felt evenly around the world, leaving some markets stronger than others, offering SaaS startups and their public brethren a chance to grow. What mattered (read the piece if you have time) is that there is a general expectation that churn will rise as the world’s economy slips in the face of a historic pandemic and its constituent city- and country-wide shutterings. In time, we should see the impact of rising churn in public earnings reports, lower startup valuations, slower growth curves, and changing go-to-market motions. But, Continue reading "SaaS growth appears to slow as churn concerns rise"

How bad will SaaS churn get in the downturn?


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

This morning we’re talking about churn — the bane of software-as-a-service (SaaS) companies big and small — in the new world we find ourselves in. SaaS companies, from startups to huge public firms, have built their businesses under strong economic conditions. So what happens to the industry now that the global economy has hit pause, layoffs are piling up across national economies and venture capital is slowing? It’s easy to say that churn will go up; some customers will close, cancelling contracts (boosting gross churn) while other customers will slow software budget growth (limiting net retention). But how bad will things really get? To get a handle on what’s next for churn, I spoke to the CEO of CrowdStrike, a public SaaS company; the CEO Gainsight, a quickly-growing Continue reading "How bad will SaaS churn get in the downturn?"

How to value a startup in a downturn


This post is by Alex Wilhelm from SaaS – TechCrunch


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The value of technology companies has fallen as the broader public markets have repriced themselves in light of COVID-19-related market and economic disruptions.

And as the public markets sort out the new value of a huge piece of global business, private companies are being shaken as well. What happens in the public markets trickles into the private markets, so if we’re seeing the value of public tech companies fall, startups are going to take a hit. To understand that dynamic, we spoke with Mary D’Onofrio, an investor with Bessemer Venture Partners. She’s the right person to chat with about the links between private valuations and public share prices as she not only helps put capital into growing startups, she also helps run the Bessemer cloud index (now a partnership with Nasdaq, and trackable on a day-to-day basis). As she’s versed on both sides of the public-private divide, Continue reading "How to value a startup in a downturn"

Slack’s slowing growth turns around as remote work booms


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

This morning we’re taking a look at Slack’s customer growth in the current moment compared to what we know about it historically. What we’d like to know is whether Slack’s current boom in customer growth is unprecedented for its business or if the company is merely returning to prior levels of logo growth. As with any modern software (SaaS) business, Slack’s revenue growth doesn’t only come from net-new customer adds; Slack also grows its top line by selling more of its service to folks who already have a paid account. Think of it like this: Slack can add revenue by selling new customer Alex And Friends Ltd. a ten seat license or it can add revenue by selling Alex Actually Has No Friends Inc. another 5,000 seats to its existing Continue reading "Slack’s slowing growth turns around as remote work booms"

Looking back at Zoom’s ascent a year after it filed to go public


This post is by Alex Wilhelm from SaaS – TechCrunch


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Zoom, a video chat service then popular with corporations, filed to go public on March 22, 2019.

Best known in venture and corporate circles, Zoom was far from a household name at the time. However, the groundwork for its 2020-era consumer breakthrough during the novel coronavirus epidemic was detailed during its IPO march in the years leading up to its public debut. The company didn’t begin trading until mid-April last year, but it was through its March 2019 IPO filing that its name took on new prominence; here was a quickly growing software as a service (SaaS) business that was posting profits at the same time. As the rate at which unprofitable companies went public set records, Zoom’s growth and positive net income helped it gain brand recognition even before its shares began to trade. Investors certainly recognized this was a rarity among SaaS companies, sending its IPO share Continue reading "Looking back at Zoom’s ascent a year after it filed to go public"

Startups valuations drop as exits are delayed and the stock market reprices tech


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

The public markets are in turmoil as the economic impact of COVID-19 comes into focus; however, it is less clear what the impact of the changing value of public companies today will have on the valuations of private firms. Startup valuations are impacted by a host of factors, one of which is the value of their public comparables (comps); if public comps lose value, private startup comps tend to earn lower valuations. This leads us to a key question: Are the stock market’s recent declines impacting the value of private startups? To get an answer, TechCrunch spoke with Phil Haslett, the chief revenue officer at EquityZen. Haslett is a founder at the company, which helps owners of stock in private startups sell their shares to interested buyers. We were Continue reading "Startups valuations drop as exits are delayed and the stock market reprices tech"

$100M rounds are down but not out in 2020


This post is by Alex Wilhelm from SaaS – TechCrunch


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Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

This morning we’re taking a look at mega-rounds: funding events of $100 million or more. What’s fun about these rounds is that they experience less temporal lag than other venture financings. Generally speaking, the larger a venture round is, the faster it becomes public knowledge. This is why seed rounds are the laggiest of all startup rounds and as you progress up the Series ladder (from A to B to C to D), the rounds that you hear about are increasingly fresh. If we wanted to take a look at 2020’s largest rounds to date, for example, instead of staring at an incomplete picture that might tell us nothing at all, we could get a reasonable handle on what’s going on in the very late-stages of private equity financings. This morning Continue reading "$100M rounds are down but not out in 2020"

Equity Monday: What’s going on with $100M rounds?


This post is by Alex Wilhelm from SaaS – TechCrunch


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Good morning friends, and welcome back to TechCrunch’s Equity Monday, a short-form audio hit to kickstart your week. Equity was busy last week, so catch up if you missed anything. We interviewed the CEO of Y Combinator, hosted a call with the TechCrunch staff digging into our favorite Demo Day companies, hosted Equity Monday on a Tuesday, held a call with Niko from General Catalyst, and hosted a guest — remotely! — on the regular Equity episode. It’s been busy.
This morning, however, was very nearly a repeat. The things that were bad last week are still bad this week. Still, there were a few things to go over:

Microsoft Teams jets to 32M DAUs, announces new features as remote work booms


This post is by Alex Wilhelm from SaaS – TechCrunch


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Today Microsoft announced that its Teams product, a Slack competitor and likely beneficiary of the COVID-19 remote work boom, has reached 32 million daily active users (DAUs). The new figure represents a huge gain on the number Microsoft shared in November 2019, when the product had 20 million DAUs.

Slack, Microsoft’s arch-rival in this particular niche of the productivity space, last announced 12 million DAUs in October of 2019. Of course, as Slack has also grown since the start of Q4 2019, that figure is dated. Microsoft and Slack have been locked in a competition to build the biggest internal-work chat service since Teams’ launch in late 2016 — it’s a rivalry I’ve written about since early 2017. The strife has a rich history, including a reported decision to not buy Slack by Microsoft’s brass, and an open letter from the then-private upstart that took aim at Continue reading "Microsoft Teams jets to 32M DAUs, announces new features as remote work booms"

As Uber and Lyft continue to melt, the 2019 unicorn class loses its shine


This post is by Alex Wilhelm from SaaS – TechCrunch


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You’d be excused for feeling that mid-2019 was in a different decade as far as venture-backed IPOs go.

Last year saw a number of successful flotations of venture-backed technology and technology-enabled companies, and most performed well after they began trading. But despite some early success, a number of the most famous 2019 IPOs have seen their valuations decline rapidly in ensuing quarters. In some cases, once richly valued public unicorns are off more than twice the market’s recent declines, have given up all their gains earned as public companies, or fallen under their final private market valuations. It’s a stunning reversal for several of the most-lauded companies to come out of the venture capital machine in a decade.