SAAS Founders at Work
Introduction
(LATEST) PART 9: Building on a Technology Theme Across Multiple Successful Startups — Krishna Dunthoori, CEO, Apty
(PREVIOUS)
PART 1: Identifying Your Target Market — an interview with Scott Dorsey, Co-Founder/CEO of Exact Target (acquired for $2.5B by Salesforce)
PART 7: Successfully Pivoting a SaaS Business — Brian Litvack, CEO and Co-Founder, LeagueApps
Introduction
A core component of 645 Ventures’ vision is to empower world-class founders to repeatedly achieve extraordinary outcomes. One way for us to advance this vision is to arm seed-stage founders with knowledge that makes their process of building an early-stage company easier. Our SaaS Founders at Work study evolved out of our desire help seed-stage SaaS founders learn from successful companies that came before them. There are several valuable studies and articles on SaaS companies at the expansion and growth stages. These include studies by Matrix Partners and Bessemer Ventures on the performance metrics SaaS companies should track,[1] as well as benchmarking studies released by OpenView Partners and Insight Venture Partners on how the best companies stack up at the expansion-stage and growth-stages, respectively.[2]
However, when asked by seed-stage founders where they should find similar content for earlier stage companies, we found there aren’t good sources of content that provide valuable advice and perspective on how strong SaaS companies are built in their early days. So we decided to create one, by working with top founders and investors in SaaS companies to produce a study. We had the goal of answering the following questions:
· How do the best SaaS companies choose a target market?
· How do they build their teams in the early days?
· How do they choose the right pricing model?
· How do they most effectively raise their first capital?
· How do they pivot their company when their initial product does not reach product-market fit?
· How do they reach successful exit events?
In this study, we had the privilege of speaking with multiple talented founders and CEOs at different stages of their entrepreneurial journies, ranging from founders that recently raised Series A rounds, to founders who have exited their companies for multiple billions of dollars. Although each interview covered multiple aspects of building a company, we classified each interview by the topic area that we felt provided the interview’s most valuable insight.
We also had the privilege of speaking with several top SaaS venture investors to hear their perspective on the qualities that define great SaaS companies. We asked them what characteristics do they look for in the early-stage companies they back, in particular in terms of team, market opportunity, and product. Their perspectives provide valuable guidance to SaaS founders who seek to raise venture capital for their businesses.
No two companies are alike, and this study does not presume to cover nearly all aspects of what defines a successful SaaS company in the early days. At the same time, we are big believers in the Mark Twain quote, “History doesn’t repeat itself, but it often does rhyme”. Hopefully this study will be a helpful songbook for SaaS founders as they create their new compositions, learning from older melodies to create new rhymes of their own.
Over the next 9 months, we will publish this interview series, one interview per month with either a founder, CEO, or investor, with each interview including a Q&A transcript accompanied by a summary of key learnings. The interview series will be published on our Medium blog Series, “SaaS Founders at Work.” Each interview will conclude by revealing the topic and interviewee for the next month.
[1] Two of the best studies on SaaS metrics are Matrix Partners’ “SaaS Metrics 2.0 — A Guide to Measuring and Improving What Matters”; and Bessemer Ventures’ “Top 10 Laws of Cloud Computing”.
[2] For detailed expansion-stage and growth-stage competitive benchmarks, we respectively recommend OpenView Venture Partners’ “SaaS Metrics that Matter Most” and Insight Venture Partners’ comprehensive set of benchmarks on SaaS Financial and Operating Metrics and SaaS Sales Metrics.
645 Ventures is a New York City early-stage venture capital firm, making technology investments in the East Coast and Bay Area regions. Learn more about us and get to know our portfolio here.
