SaaS Fundraising in 2017

Tomasz Tunguz

Comparing 2017 averages to seven year highs, we observe Series A, Series B, and Series Seed round sizes are effectively at their all-time highs, ignoring some minor differences. If the first six months of 2017 are any indication, then 2017 should be roughly similar to 2016 and 2014 in terms of total dollars raised by SaaS startups in seed rounds through Series C. When I analyzed the SaaS fundraising market in 2016 , three trends emerged.

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What Happens When Startups Turn from Their Innovation Stage to Operational Excellence?

Both Sides of the Table

As a result of the efforts of Sam, Rahul, Ted, Nicolas, Chang and the entire MakeSpace team our revenue grew 150% between the months of January and October of 2017, having served more than 20,000 customers and stored more than a million individual items for our customers. With $30 million raised in 2017 ($57 million total) we feel in a great position to execute against our ambitions and truly scale our operations although we know each new phases adds new challenges.

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A Call to Brains: Can We Mobilize Education Like Manufacturing in WWII?

This is going to be BIG.

"In May 1940, Franklin D. Roosevelt called for the production of 185,000 aeroplanes, 120,000 tanks, 55,000 anti-aircraft guns and 18 million tons of merchant shipping in two years. Adolf Hitler was told by his advisors that this was American propaganda; in 1939, annual aircraft production for the US military was less than 3,000 planes.

I hate MVPs. So do your customers. Make it SLC instead.

A Smart Bear

Product teams have been repeating the MVP (Minimum Viable Product) mantra for a decade now, without re-evaluating whether it’s the right way to maximize learning while pleasing the customer. Well, it’s not the best system. It’s selfish and it hurts customers. We don’t build MVPs at WP Engine. The motivation behind the MVP is still valid: Build something small, because small things are predictable and inexpensive to test.

Why You Shouldn't Put VCs on a Pedestal

This is going to be BIG.

Influencers. Kingmakers. Sharks. Power brokers. Visionaries. There are a lot of ways the startup world describes venture capitalists that portrays a certain power dynamic, real or perceived, that I believe is at the heart of so many of the industry's problems. The industry treats VCs as if they hold all the cards, and the worst behaviors of investors reflect that. Frankly, it makes me uncomfortable, because it's undeserved. Here's why. Who's really chasing who?

Five Lessons Learned from the Ample Hills $8 Million Raise

This is going to be BIG.

A post shared by Charlie O'Donnell (@ceonyc) on Dec 20, 2017 at 8:06am PST When you're Ample Hills Creamery , the #1 rated ice cream shop in the country you can pretty much throw everything you've been told about fundraising out the window. Board meetings at @amplehills are dangerous.

What happens when you take 12 investors to Silicon Valley?

Startup Catalyst

In November 2017 we delivered our first Investor Mission, heading to San Francisco for an intensive week meeting with angels, VCs, corporate venture programs, accelerators, startups, pitch events, and dinners. 2017 Investor MissionThe mission was led by Steve Baxter, an investor on Shark Tank and the current Queensland Chief Entrepreneur. Who we took.

FundersClub Weekly Newsletter - June 15, 2017

FundersClub

technology startup founders and how that affects the gender diversity of the employees they hire in " The 2017 US Startup Team Gender Diversity Study. FundersClub Portfolio News. Jerrod Engelberg of FundersClub hosted a Q&A on FC Live with Brayton Williams of Boost VC , and the full video can now be watched here: Q&A with Brayton Williams of Boost VC — FundersClub Live Series.

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Not Interested: How to know whether you've actually got an investor on the hook.

This is going to be BIG.

I don't think there's ever a time when I feel more like I'm raining on parades as when founders tell me how interested other VC firms are in investing. I've seen it time and time again where founders, understandably apprehensive about fundraising, read too much into their engagement with investors--especially non-partners at firms.

What You Heard About VCs is Usually Wrong and Why You Can Blame VCs for It

This is going to be BIG.

VCs lie. Everyone knows that or at least suspects it. What you don't know is whether they're lying to you or to themselves. I can't tell you how many times I've heard an entrepreneur make a generalization about VCs based on a few meetings that was completely wrong--and they were usually basing their statement off what the VC told them.

FundersClub Weekly Newsletter - June 1, 2017

FundersClub

" Boris Silver of FundersClub shares his key takeaways about the digital currency/token space from the inaugural Token Summit in NYC in " My 6 Takeaways from Token Summit 2017. FundersClub Portfolio News. Jerrod Engelberg of FundersClub will host a Q&A on FC Live with Adam Draper of Boost VC on June 13th. Submit questions and watch the full event here: Q&A with Adam Draper of Boost VC — FundersClub Live Series.

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Understanding What’s Going on in #LATech

Both Sides of the Table

Upfront Ventures was created 20 years ago as one of the original VC funds in Los Angeles. Back then only 15% of our dollars were invested locally whereas today 50% of our dollars are invested in LA. 10 years ago we found ourselves trying to persuade LPs and VCs that it was worth spending more time getting to know the LA market and now the most common refrain that I hear from them is “there really is something going on in LA.” Don’t we know it. It’s not just Snapchat, although there’s that.

FundersClub Weekly Newsletter - June 8, 2017

FundersClub

FundersClub Portfolio News. Jerrod Engelberg of FundersClub will host a Q&A on FC Live with Adam Draper of Boost VC on June 13th. Submit questions and RSVP for the event here: Q&A with Adam Draper of Boost VC — FundersClub Live Series. Le Tote announces the launch of Olivia Culpo x Le Tote, a summer capsule collection that marks a milestone for Culpo as the debut of her first-ever collection in " Olivia Culpo and Le Tote Launch Exclusive Design Collaboration.

FundersClub Weekly Newsletter - June 22, 2017

FundersClub

FundersClub Portfolio News. Flexport plans to open a 100,000-square-foot warehouse in Atlanta and is scouting for about 25,000 square feet of office space in Midtown, which will add more than 200 jobs in " Freight industry disruptor Flexport plans $100 million Atlanta hub. " Instacart will now handle orders for Wegmans grocery store, with deliveries initially available in suburbs near Washington, D.C.,

The Software Startup Sectors Raising the Most Capital in 2017

Tomasz Tunguz

And this data implies that fewer earlier stage companies raised, which means there will be fewer Series Bs in 2017 and fewer Series Cs in 2018. Over the last seven years, software startup investing has changed quite a bit. In 2010, classic SaaS was booming, the benefits of a subscription model were finally becoming clear to the public markets and the mass-market.

You can have two Big Things, but not three

A Smart Bear

Forget work/life integration for a minute. How much time do you have, regardless of partitioning? From your 24-hour daily allotment, the 1950s-style break-down is 8 hours for work, 8 for home and commute, and 8 for sleep and ablutions. So, “work” and “home” are the two things in which you can spend 40+ hours per week. This is the amount of time it takes to tackle something huge. A career. A parent. A startup.

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The Case For & Against Cryptocurrencies (for those tired of all the noise)

Both Sides of the Table

I believe this use of cryptocurrency will develop and flourish long after the dust settles from the hype and crash of cryptocurrencies that we’re experiencing in 2017. In more than a decade of writing about the Internet and tech-enabled businesses I’ve learned that mobs don’t do nuance well. If you read the headlines or talk with zealous friends you may well think cryptocurrencies are either our savior from bureaucratic, ossified governments or are purely speculative Ponzi schemes.

Introducing Petal, Providing Access to Credit to Thin File Consumers

This is going to be BIG.

One of the biggest fears about the future of data is that everyone will turn into a number--that algorithms will turn everyone's personal experience into a single score that will decide whether or not you get what you want, a job, a house, a car, financing for a new business etc. or whether you get shut out. Actually, you don't have to wait for that to happen. Consumers have been living this reality since 1956.

Israel Mission day 5 summary

Startup Catalyst

2017 Israel

Work Like You Mean It: Why I backed Wethos to change the future of work.

This is going to be BIG.

If economists tried to measure the cost of the malaise that the election of 2016 left, we'd undoubtedly see billions, if not more, lost in worker productivity. At the same time, I don't think I've ever seen more political engagement in my lifetime--and not just political engagement, but all sorts of action around causes they care about. These two realities are linked. If you're not doing something to positively affect the world around you, you've likely been overcome by a lack of motivation.

Five Lessons to Learn from the Success of The Wing

This is going to be BIG.

Two years ago, Brooklyn Bridge Ventures became the largest seed investor in The Wing --a network of co-working and community spaces for women founded by Audrey Gelman and Lauren Kassan. They recently opened their second location in Soho after raising an $8mm Series A from NEA earlier this year, and their 3rd and 4th will open in the next few months.

FundersClub Weekly Newsletter - July 13, 2017

FundersClub

" Jason Rowley of Crunchbase dives deep into the state of the global venture capital ecosystem, and assesses investment and liquidity in terms of money in versus money out in " Inside the Q2 2017 global venture capital ecosystem. FundersClub Portfolio News. OnboardIQ makes applying for hourly work easier, and raises $9.1 million to expand their product and customer reach in " OnboardIQ raises $9.1 million to automate hiring for hourly workers.

Brittleness comes from “One Thing”

A Smart Bear

They attacked that problem, and today (Nov 2017) they’re well on their way, as recognized by the media at large. We’re tired of hearing how small software companies usually fail. The data show that the two most common causes are: (1) Product isn’t useful to enough people, and (2) Problems with the team. But what about the companies that die even though they did sell some copies of software, and where the early team isn’t dysfunctional?

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FundersClub Weekly Newsletter - July 6, 2017

FundersClub

Martin Casado of Andreessen Horowitz shares his commencement speech delivered to Northern Arizona University’s Class of 2017 about how a new college grad, or anyone looking to make a change, can navigate all the uncertainties involved in doing anything worthwhile in " Navigating Uncertainty: Advice for Graduates (and Others Changing Course). FundersClub Portfolio News.

Why Great Executives Avoid Shiny Objects

Both Sides of the Table

The modern world is filled with constant distractions. Only those with maniacal focus on results and a willingness not to engage in every activity achieve extraordinary results. As executives we’re all seemingly accessible at any moment to anybody via email, Twitter, Facebook, LinkedIn or Text. We are over-intro’d and at the same time under-resourced in terms of staff to handle the barrage of in-bound requests.

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Details of Upfront Ventures New $400 Million Fund

Both Sides of the Table

If you watch the short video below you’ll have a great sense on what is uniquely LA in 2017 — hearing from Mayor Garcetti, Kobe Bryant, Tyra Banks, Baron Davis and so many great advocates for the uniqueness of our city and some of our key stats. I am so proud and humbled to be able to formally announce that Upfront Ventures has raised its 6th venture capital fund in the past 21 years. Upfront VI is our latest core fund and is $400 million to invest in early stage entrepreneurs.

The Rainy Day Fund of Reputation

This is going to be BIG.

One aspect of venture capital that rarely gets talked about is competition to get into a deal. What happens when a founder has that rare wealth of riches when they're choosing who they're going to allow onto their cap table? The tables turn and the one being pitched to becomes the one pitching. The moment when you find out that you're not guaranteed a slot is my least favorite as a VC. I've seen different investors react to it differently. Some are really competitive.

Finding Community in NYC Tech Again

This is going to be BIG.

— Jeff Namnum (@namnum) December 8, 2017. I'm trying to bring together every single founder in NYC who raised their first $500k or more of capital in 2017. (If There's a thread going on Twitter about doing a BarCamp in NYC again. I started with a tweet from Jeff Namnum about how he joined the tech community. Forever grateful to @tonybgoode @noneck @whitneyhess @ceonyc and others for making a Long Island guy feel welcome a hundred years ago at barcampNYC.

How MakeSpace Recently Closed $30 million in New Funding

Both Sides of the Table

So how did a company that provides storage grow so fast (we’ll exit 2017 with 10’s of millions in recurring revenue), why is it so defensible and is it really a tech startup? Just over a year ago I wrote about how MakeSpace had raised $17.5 million in capital to build out its operations in 4 cities: New York City , Los Angeles , Chicago and Washington D.C.

Qualify Your Investor

This is going to be BIG.

I can't tell you how many pitches I've taken where a founder told me they needed revenues, or a fully functioning product to raise capital--and they were told that by X number of investors, so they took it as gospel. Plenty of companies have raised money pre-revenue and pre-product, so why the discrepancy? What you're most likely hearing from an investor who says this is that what it takes to raise from *them* and they're not speaking for the whole market.

My Least Favorite Part of Venture Capital

This is going to be BIG.

I'm a lead investor. That means I'm usually the first person to put down a price on what your company is worth--a dollar value on months, if not years, worth of your work, blood, sweat, tears, stress, etc. Here's a piece of paper that says how much I think your dreams are worth." The reality is, any price that I put down at the stage that I invest isn't going to feel like enough--and if it doesn't feel like enough, I'm probably grossly overpaying. But, you don't feel like that as the founder.

I Can Be Difficult

This is going to be BIG.

Last week, I heard the word "difficult" describing investors twice. Once was about me and once wasn't. The founder and investor relationship is, in fact, a difficult one to get right. Both sides walk in with a lot of cognitive biases and style differences unique to every pair. Meanwhile, the work of trust building is hard and takes a long time. In one instance, there was an investor holding up a round after agreeing to sign off on something verbally.

The Surest Sign You’re Winning is When Goliath Takes a Swing at You

Both Sides of the Table

I’ve been involved with several startups where a giant incumbent attacks you and tries to sue you out of existence. When you first receive the threat it feels like the local pizza shop when they first get a call from the local mafia boss and you can feel the shake-down coming. The first instinct is fear, then dread, then panic. You begin to think about how hard it will be to fund raise, sign customers, hire employees, etc. with the cloud of a lawsuit hanging over you. That’s what bullies want.

The Cold E-mail and the Crazy Big Idea: Industrial Organic Announces Seed Round

This is going to be BIG.

A post shared by Charlie O'Donnell (@ceonyc) on Jul 6, 2017 at 9:31am PDT I was once asked by a potential investor what I thought the exit of this company will be. "Hi Charlie, I've requested a meeting with you during the first week of March. Here are ten reasons why you should take the meeting."

You Can Hear the Desperation When They Pull the Trigger: Gun Control or Empathy

This is going to be BIG.

I didn't grow up in a neighborhood where gunshots were a thing--and I know I am incredibly lucky for that. That's why when I pulled up to the corner of Atlantic and Fourth by the Barclay's Center yesterday at a couple of minutes after 2pm, the sound of gunfire was pretty startling, and it's not something I can easily shake. Pop-pop-pop! I knew what it was right away. A car or motorcycle backfires once. Construction noises are mechanical and repetitive.

The fundamental lesson of the forces governing scaling startups

A Smart Bear

Idealistic founders believe they will break the mold when they scale, and not turn into a “typical big company.” By which they mean: Without stupid rules that assume employees are dumb or evil, without everything taking ten times longer than it should, without wall-to-wall meetings, without resorting to hiring anything less than the top 1% of the talent pool, and so on.

Getting Your Head in the Game for Fund Raising

Both Sides of the Table

When you run a startup you’re always on borrowed time. You have cash in the bank, a monthly burn rate and a “cash out” date that few in the company truly comprehend. I’ve never met a founder who wasn’t acutely aware of his or her ticking time bomb and the sense that failure and humiliation is a real possibility. It’s why so few can really start a business from scratch. It’s the ultimate in accountability and public judgment.