Featuring 5 prominent Founders – from Boast, Calendly, Coda, LaunchDarkly, and SaaStr – that have achieved scale, at “Founder Confidential” you will hear about the highs and lows of fundraising, working with a VC board, and real talk about what it really is like to be a true Founder. Moderated by Lloyed Lobo, Co-Founder, Boast.AI, and featuring a panel of CEOs that collectively raised more than $1B, including Shishir Mehrotra, Cofounder and CEO, Coda, Edith Harbaugh, Cofounder and CEO, LaunchDarkly, David Barrett, Founder and CEO, Expensify, and Jason Lemkin, Founder and CEO, SaaStr.

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How Founders Should Think About Fundraising & Valuation in Today’s Market

Today’s SaaS market seems larger and more unpredictable than in previous years. So how should founders approach valuation and fundraising? 

Shishir zeroes in on the high valuations in the current market and offers his thoughts: “I think the valuations have gone up because everybody has realized [that] the markets are a lot bigger than they thought…you see these companies get much larger than expected. It’s surprising to people who don’t say the way that technology is taking over industry, after industry.”

The opinions diverge on the market: David states that the market isn’t necessarily larger. Instead, he attributes the high valuations to an influx of cash and a finite number of investments. Edith pushes back on this theory and insists that the market is indeed growing. As it has become more established as an industry, Saas has opened many more possibilities for entrepreneurs to tap into highly valuable businesses. 

Jason points out the astronomical spike in growth and suggests that scalability is attractive to investors and drives high valuations. “In the BVP Cloud 100 … 25% of them were growing more than 100% in ARR. That is the difference in the cloud. The top quartile is growing triple digits at $100 million. And when you think about compounding –– assuming these have NRRs north of 100 –– that means they’re all going to hit a billion in revenue. As silly as that sounds, that’s now commonplace.”

The Right Time to Fundraise and How to Build Relationships with VCs

Early-stage founders might be wondering when the right time is to bein fundraising. The panelists had a few thoughts. 

Shishir: “My view is don’t take money from people if you don’t think you can hit your investment goals. If you’re misaligned with your investors, that’s going to be trouble at some point.”

David: “You take the money when you have a plan to spend it. There is a risk of being over-capitalized and it changes your entire company.”

Edith disagreed with the idea that VCs impact culture negatively: “Culture is super important, [but] I think it’s a false dichotomy to say that if you take VC money, you’re going to have a terrible culture.”

When you do decide the time is right for investment, how do you approach VCs? It can feel daunting to stand out in a sea of other hopeful SaaS founders hoping to get their foot in the door. 

Speaking from their wealth of experience, the founders impart some valuable advice.

Edith: “Focus on your business. Build up your customer base, and your customers will start talking. They are the ones who will tell the VC what they’re using in-house, or what the new tools are, and that will build your brand.”

David: “I think you deliver the results first, and let them come to you. Focus all your time on building a product that customers care about, and then VCs will care about you.”

Shishir: “When you’re pitching, take advice from investors that are one stage forward or back from wherever you’re pitching. [Secondly], they’re all just people. Find a way to connect with [VCs] that doesn’t have anything to do with raising money.”

Key Takeaways

  • SaaS valuations are higher in today’s market. While there might be a few explanations for this, it’s likely that the opportunity for scale and growth is driving the numbers.
  • Only take investments if you feel confident in delivering on your promises and you have clarity about spending.
  • Focus on your business and let your customers attract VCs for you.
  • Find ways to connect with investors on a human level.

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