Slack’s shares are set to fall sharply this morning, down around 16% in pre-market trading. As the company beat analyst expectations last quarter and guided within range, the selloff might feel a little surprising.
Perhaps it shouldn’t.
I spoke with a VC last week about what the new benchmark results are for private SaaS companies, and to my surprise, he said software startups don’t have to grow at 100% to be fundable in today’s market. Given what I’d heard from other venture capitalists about how so much of their portfolios had found a COVID-19 growth bump, the perspectives felt incongruous.
The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Startups wanted to grow at a pace of more than 100% pre-pandemic, and some have accelerated since. So how could a startup growing less than three
It was just days ago that cries of “stocks only go up,” and “no it makes sense that Tesla is going up because it split” and other bits of unironic stupidity were the only thing you could read online about the equities markets. Today, and yesterday, that all went to hell.
Stocks, it turns out, can go down, and they can do so very quickly. And, yes, even Tesla can endure a strong slump, giving up tens of billions of dollars in market capitalization at the same time.
What’s going on? It’s impossible to point to a single thing as the reason, but it’s worth noting that the United States is still suffering from the business impacts of COVID-19, with high unemployment and other related issues plaguing the broader economic climate.
Update: While this piece was in edit, news broke in the FT and the WSJ that SoftBank — yes, Continue reading "Stocks are selling off again, and SaaS shares are taking the biggest lumps"
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.
The whole crew was back, with Natasha Mascarenhas and Danny Crichton and myself chattering, with Chris Gates behind the scenes making it all work. An extra shout-out to Natasha this week as we spent a lot of time talking about edtech, a category that she spearheads for us and has brought to the show. It’s a big deal!
We’re on YouTube now, don’t forget, and with that, let’s get into the news:
Avi Freedman is like any other founder: He wants to build a great company. In this case network analytics platform Kentik, and he needs venture capital to do it. Like pretty much all founders, he doesn’t like the dilution that comes from taking vast sums from VCs in order to grow. There’s always been an alluring solution to this dilemma, but one that comes with its own tradeoffs.
The word has negative connotations, but the reality is that just like equity capital, debt is a key tool in the corporate finance toolbox. Judicious use of debt with the right terms and conditions can cut the cost of capital for a startup significantly, saving founders and early-stage investors from serious dilution as a company scales. Used too heavily or improperly however, and debt can turn a bad financial quarter into a dead company, stat.
Founders, particularly those who run Continue reading "How one founder leveraged debt to drive early growth and avoid dilution"
Adaptive Shield, a Tel Aviv-based security startup, is coming out of stealth today and announcing its $4 million seed round led by Vertex Ventures Israel. The company’s platform helps businesses protect their SaaS applications by regularly scanning their various setting for security issues.
The company’s co-founders met in the Israeli Defense Forces, where they were trained on cybersecurity, and then worked at a number of other security companies before starting their own venture. Adaptive Shield CEO Maor Bin, who previously led cloud research at Proofpoint, told me the team decided to look at SaaS security because they believe this is an urgent problem few other companies are addressing.
Pictured is a representative sample of nine apps being monitored by the Adaptive Shield platform, including the total score of each application, affected categories and affected security frameworks and standards. (Image Credits: Adaptive Shield)
Yet, the gargantuan returns we are seeing today for SaaS portfolios are unlikely to repeat themselves.
The big threat in the short term is simply price: SaaS investing has gotten a lot more expensive. It may be hard to remember, but just a decade ago the business model of “Software as a Service” was revolutionary. Much in the way that it took years for cloud infrastructure to take hold in corporate Continue reading "SaaS securitization will disrupt VC’s biggest returns this coming decade"
After the bell yesterday, Apple-device management company Jamf announced its final IPO pricing. We’ve been tracking the Jamf IPO for some time, as it is yet another example of a technology company worth $1 billion or more going public during the COVID-19 pandemic.
Back in March, we’d have guessed that today’s IPO market would be devoid of any public offerings, let alone a litany of successful flotations. But, 2020 is unpredictable; instead of seeing an IPO drought, there have been a modest deluge of debuts.
And yesterday Jamf continued the trend of recent IPO pricing strongly, at times selling more shares in the bargain.
The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or receive it for free in your inbox. Sign up for The Exchange newsletter, which drops Saturdays starting July 25.
Jamf’s IPO underscores that public market investors
Insider, a Singapore-based startup that develops software to help clients make marketing decisions, plans to launch in the United States after raising a $32 million Series C. The round was led by Riverwood Capital, with participation from Sequoia India, Wamda and Endeavor Catalyst.
Founded in 2012, the company says its SaaS for multichannel marketing and customer engagement is currently used by more than 800 brands, including Singapore Airlines, Marks and Spencers, Virgin, Uniqlo, Samsung and Estee Lauder.
Insider’s Series C brings its total funding so far to $42 million. In addition to entering the U.S., the new capital will be used on sales and marketing, hiring more engineers for its research and development team and adding new features to its platform.
One noteworthy aspect of the company is that half of its executive team, including co-founder and chief executive officer Hande Cilingir, are women. The company runs Continue reading "Singapore-based marketing SaaS startup Insider gets $32 million to enter the U.S."