How to Pick a Term Sheet: OpenView’s 5 Step Framework


This post is by Mackey Craven from Openview Labs


Click here to view on the original site: Original Post




Editor’s Note: This article was co-authored by Mackey Craven and Sean Fanning.  A great deal has been written about venture investments, ranging from up-to-date reporting on round sizes and valuations (just read the most recent Crunchbase, Pitchbook or CBinsights blog) to breaking down the complexity of a venture deal into consumable components (Brad Feld’s and Jason Mendelson’s Venture Deals is hands down the best resource on the topic). Let’s say for a moment that you’ve read all that, executed like hell, and find yourself in the enviable position of choosing between multiple term sheets – how do you choose which one to take? While the answer is sometimes easy because your favorite firm gave you the best terms, it’s rarely so straightforward. Through supporting CEOs in OV’s portfolio, we developed a simple, yet powerful, framework for picking a term sheet. Our five steps will help you compare the
Continue reading "How to Pick a Term Sheet: OpenView’s 5 Step Framework"

Developing an Effective Long-Term Data Strategy for Your Company


This post is by Ruben Ugarte from Openview Labs


Click here to view on the original site: Original Post




Analytics is considered to be critical at many companies, but few are able to get it right. Most companies quickly realize that getting a strategy in place can actually be quite hard. It is easy to drown in the hundreds of tools available, hype and other irrelevant things. But, it’s possible to successfully to develop an effective short and long-term data strategy. These ideas come from my conversations with our clients and learning what are the most confusing aspects when it comes to data.

Start With a Good Analytics Foundation

Just like in houses, a good foundation can make a huge difference for your data. I have seen companies who are forced to spend more resources than they should have because their initial foundation wasn’t very good. Before you start writing any code or setting up any tools, there are some challenges you should expect when it comes to analytics
Continue reading "Developing an Effective Long-Term Data Strategy for Your Company"

Why Are We Seeing Fewer Venture Capital-backed IPOs?


This post is by Jeff Williams from Openview Labs


Click here to view on the original site: Original Post




I have what many would consider an oddly-vivid memory of VC-backed IPOs in 2007. Midway through that year, I got my start as an investment analyst at a VC fund-of-funds. Within just months I had seen several portfolio companies go public, and venture investors taking a company public immediately cemented itself in my mind as the manifestation of just how great American capitalism is. Maybe it’s the delusion from all of those years I spent creating Excel masterpieces, but I can’t help — in looking back — feeling that they just don’t make VC-backed IPOs like they used to. Turns out that’s mostly true. The number of US publicly-listed companies hit its peak of 7,607 in 1997 and has spiraled downward since, having declined nearly every year and reaching just 3,618 by the end of 2017. Different thing? Yes, but the number of new venture-backed IPOs has also sharply declined;
Continue reading "Why Are We Seeing Fewer Venture Capital-backed IPOs?"

Security for SaaS Startups: A Guide for Founders & CEOs


This post is by Rajat Bhargava from Openview Labs


Click here to view on the original site: Original Post




For most founders and CEOs of SaaS startups, security isn’t a top 3 priority. With funding, recruiting, and building a product higher on the to-do list, it’s hard to blame entrepreneurs for leaving network and data security to their technical team. While there isn’t a need for founders and CEOs to be security experts, the issue is critical enough now that they should have a decent handle on what to do and why. This article is aimed at being the security cheat sheet for busy entrepreneurs, and also a double check for the technical team to ensure that their foundation is solid.

Why Security Matters

Builds Customer Trust

Quite simply SaaS platforms store client data. So, clients are trusting that SaaS platforms have strong controls over the data, mitigating the chances of a security breach. Regardless of whether the data is considered PII (personally identifiable information) or not, every customer
™
™
Continue reading "Security for SaaS Startups: A Guide for Founders & CEOs"

2018 Expansion SaaS Benchmarks: It Ain’t Peak SaaS Yet


This post is by Adam Marcus from Openview Labs


Click here to view on the original site: Original Post




According to Gartner, global revenue from SaaS companies topped $58 billion in 2017 and the firm estimates they’ll grow to $99.7 billion by 2020. We now have two SaaS companies worth more than a $100 billion – Adobe and Salesforce – with Workday and ServiceNow quickly on their heels. In 2018, we’ve seen several successful IPOs, including Zuora, Pluralsight, Smartsheet, Avalara, DocuSign and Dropbox with a few more on tap. If you take a step back, it’s staggering to think how far we’ve come – can you believe Salesforce.com turns 20 in February? I know The Economist recently called Peak Valley, but we’ve yet to hit peak SaaS. Need evidence? Just look at the results of our 2018 Expansion SaaS Benchmarks to see why. We surveyed 400+ enterprise SaaS companies on topics ranging from competition in the space to pricing, the global growth of SaaS, diversity and more.
Continue reading "2018 Expansion SaaS Benchmarks: It Ain’t Peak SaaS Yet"

Product Led Growth: The Secret to Becoming a Top Quartile Public Company


This post is by Sean Fanning from Openview Labs


Click here to view on the original site: Original Post




Software investors have traditionally focused on three key valuation drivers when evaluating businesses, including:
  1. Revenue growth, which is strongly positively correlated with valuation (enterprise value / revenue)
  2. Gross margin, which demonstrates the scalability and repeatability of product delivery to customers
  3. Rule of 40, calculated as revenue growth plus EBITDA margin, which acts as a proxy for efficiency (balancing growth vs. burn)
Surprisingly, the 1H 2018 IPO Cohort1 is not differentiated on key valuation drivers as compared with the broader public SaaS index2. Let’s take a look: Product Led Growth Index Source(s): Pitchbook on 8/10/2018. Market data as of 6/30/2018. Growth, particularly forward (2019P) growth of the Cohort is on par with the broader SaaS index (+1.6%). The Cohort isn’t surging towards market dominance significantly faster than other public companies. The 1H 2018 IPO Cohort operated at lower trailing gross margins compared to the SaaS index (-2.3%) suggesting
Product Led Growth Index
Product Led Growth Index
Continue reading "Product Led Growth: The Secret to Becoming a Top Quartile Public Company"

The 2018 State of SaaS IPOs


This post is by Sean Fanning from Openview Labs


Click here to view on the original site: Original Post




The IPO has all but disappeared. In 2012, the SEC’s Advisory Committee on Small and Emerging Companies published a report titled “Where Have All the IPOs Gone”. The report sought to explain the recent decline in IPOs and the steady stream of companies leaving public markets, opting to go private instead through M&A. Across all industries, an average of 311 firms went public every year from 1980-2000, but between 2001-2011 an average of just 99 firms did so. For the software industry, the availability of private capital at all stages has accelerated the decline in new pricing activity. Private equity firms are increasingly comfortable with software assets – more PE firms have raised dedicated “pre-IPO funds” or mega-funds, and Softbank’s Vision Fund has put more money to work in the last year than was added to the NYSE in the first half of 2018. Strategic M&A
Continue reading "The 2018 State of SaaS IPOs"

VC Investor Christoph Janz on How to Scale to $100MM ARR


This post is by Kyle Poyar from Openview Labs


Click here to view on the original site: Original Post




Editor’s Note: The following article is based on a recent episode of OpenView’s BUILD podcast. You can listen to the full episode featuring Christoph Janz, Managing Partner at Point Nine Capital here. As an early stage-investor, Christoph Janz from Point Nine Capital has an excellent track record of investing in high-growth technology companies – think FreeAgent, Geckoboard and Typeform. Perhaps one of the best-known companies in his portfolio, however, is also the first.
“It really all started with Zendesk. I knew nothing about SaaS, but I fell in love with the idea of the consumerization of enterprise software.”
Christoph got involved with the company when it was about a year old and the product had only been in the market a few weeks. At that time, the fledgling company boasted a whopping fifty or so customers, each paying $100 per month. Today, Zendesk is aiming to hit a billion
Continue reading "VC Investor Christoph Janz on How to Scale to $100MM ARR"