Dear SaaStr: What is a “Good” Exit Strategy for a SaaS Company Raising a Seed Round?
Dear SaaStr: From An Investor’s Perspective, What is a “Good” Exit Strategy/Plan for a SaaS Company That’s Raising a Seed Round? Ok, people are going to tell you not to have a slide or discussion on an “exit strategy” and they are...
There Are Only ~58 Acquisitions of $50m+ or More in Software a Year per Theory Ventures
So long time friend of SaaStr Tomasz Tunguz, now heading his own VC fund Theory Ventures, has again summarized a lot of data into a few great charts. This time, on Mergers & Acquisitions. My biggest take-away: there are barely more than 50 acquisitions of...
Dear SaaStr: What Should Founders Do To Get Noticed By An Established Company’s M&A Team?
Dear SaaStr: What Should Founders Do To Get Noticed By An Established Company’s M&A Team? Don’t bother too much with trying to get “corporate development” or the M&A team’s attention. That’s not their job. Probably the most...
Why Founders Leave After Acquisitions
Why do founders leave after their companies are acquired? There are many nuanced answers, but in the short and medium term, it’s incentives. Acquirers use 3 incentives to get founders to stay: Sticks. If you leave, you lose X% of the consideration. Acquirers try to...
After I Sold My Company, I Couldn’t Make Decisions Again for a While
What’s the toughest part of running a startup? A partial list: Recruiting. This is always hard, forever. Co-founder Conflict. Hopefully, you don’t have this. If you do, boy it’s hard. Almost running out of money. Happens to almost all of us....
How To Reverse-Engineer a $100M Exit: SaaStr on My First Million Pod
How do you reverse-engineer your first million as a SaaS startup founder? SaaStr founder and CEO Jason Lemkin chats with Sam Parr on the popular YouTube channel and podcast My First Million about what’s required to make it on the map for a $100M exit and then reverse engineers the steps to get there.
Rule 1: New minimum is $400K per employee
Rule 2: Go multi-product
Rule 3: Your second product must be bigger than your first product
Cheat code: Double your prices
Rule 4: 30% of your revenue is international
Rule 5: Localize your product
Cheat code: Remove friction
Rule 6: 100% net revenue retention
Rule 7: Don’t raise double digit millions
What I Learned Selling My Company for $130M with Harry Glaser Founder of Periscope Data and ModelBit
Harry Glaser of Periscope Data and ModelBit shares his experience of selling his SaaS company for $130M and the challenges he faced during the process.
Dear SaaStr: How Do You Build a Real Exit Strategy?
Dear SaaStr: How Do You Build a Real Exit Strategy? First, bear in mind acquisitions are relatively rare. The vast majority of startups will never get one acquisition offer, let alone a good one. Still, it’s not random. I’ve been through it twice as a...
Dear SaaStr: When You Sold Your Startup, What Were the Downsides?
Dear SaaStr: When You Sold Your Startup, What Were the Downsides? When you sell: it’s not yours anymore; and your upside is capped. Start with Challenge #1. Ask yourself 4 “Are You OK With” questions: The name being changed? With the business being shut down in 2–5...
Can You Still Get Acquired for a Decent Price if Growth Has Slowed or Even Stopped? Yeah, Sometimes
So the other day a CEO reached out to me about advice on an acquisition. They wanted to do three things: Enter a space they had no product or customers in today; and Add on at least $10m of extra revenue for the year; and Not add too much to their burn rate. So this...
What Are The Odds You Get Acquired Within 5 Years for a Good Price? Around 1%-1.5%
So Carta put out some recent data I found very useful on how many startups raise another round, and how many sort of quietly wind down, in the first 5 years or so after being founded (from 2018 to early 2024): Almost none IPO’d in the first 5 years, but that...
There Are Exceptions. But Expect Your Valuation To Become Your Price Floor For An Acquisition.
Dear SaaStr: Does valuation play into how likely anyone would want to acquire the business from the founders? Absolutely. A lot. There is no question “too high” of a valuation can discourage an acquisition. Acquirers will generally assume they have to pay more than...
Dear SaaStr: How Do Investors Feel About “Acquihires”?
Dear SaaStr: How Do Investors Feel About “Acquihires”? Back when I started investing, in 2013, VCs worked on getting acquihires for their struggling startups. A lot of energy was put in to find a “soft landing” for struggling investments...
Dear SaaStr: Is It Normal for a Founder CEO to End Up With Just 10% Equity?
Dear SaaStr: Is It Normal for a Founder CEO to End Up With Just 10% Equity? Yes — if you are venture-backed. Roughly speaking, this is what generally will happen after 3 rounds of traditional venture capital. Expect it and plan for it. If the company sells...
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