For cash-strapped SaaS startups trying to reach scale, the math doesn’t look great.
A slump in the public markets has dragged the entire sector down, but customer acquisition isn’t getting any cheaper. In the meantime, runways are shrinking like a wool sweater in an electric dryer, and teams that hope to fundraise better have some good news to show potential investors.
So, what’s the plan?
“The key is to focus on scaling sustainably by tapping into more overlooked and underrated sources of revenue,” says Paddle CEO Christian Owens.
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In his TC+ guest post, Owens shares several tactics “SaaS leaders can use to supercharge their expansion revenue,” such as adding upsell tiers and charging customers for priority support.
Just for a moment, forget about onboarding new customers.
Seed-stage startups that demonstrate strong gains in expansion revenue, i.e., money “generated after the customer’s initial purchase,” will always get a second look from investors.
And boosting expansion revenue during a downturn? Well, that’s even more impressive.
I won’t be sending a TC+ newsletter on Tuesday, October 18, but will return a week from today with more resources for founders and early recaps from TechCrunch Disrupt.
Thanks very much for reading,
Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist
Dear Sophie: How can I protect my H-1B and green card if I am laid off?
Dear Sophie,
I am considering leaving my current, steady job for a job with a big name in tech. I’m excited, but nervous.
I’ve been hearing that you can lose your H-1B status if you are laid off. Is there any way I can protect my immigration status while making a bold job move?
— Leap of Faith
Dear Sophie,
My early-stage startup hasn’t been able to hire as quickly as I would like due to fierce competition. Now that we’re seeing some movement in the job market, we think we can probably finally compete for some top engineering talent in our budget.
How can I hire people who were recently laid off on H-1B?
— Strategic Sponsor
Dear Sophie: How can I protect my H-1B and green card if I am laid off?
DIY: 5 ways disruptive component startups can win over OEMs
Hardware startup founders have a uniquely hard time.
Only a small fraction of tech investors will even take meetings with them, and building product pipelines is often an irregular, chaotic process.
Instead of relying on sales and marketing teams to build a customer base for his hardware components startup, Ori Mor’s company started building devices that used his company’s tech.
“There’s no point rushing when building a hardware startup,” says Mor. “Instead, start by making just a single prototype that you can use to show OEMs.”
‘Me too’ investing is eating returns
Considering the number of investors who are all-in on e-commerce, fintech, cybersecurity, cloud infrastructure, crypto and B2B SaaS, a room full of VCs might look like a crowd of Spider-Man clones pointing at each other.
“Marc Andreessen once said that ‘software is eating the world,’” writes Alan Feld, founder and managing partner of Vintage Investment Partners.
“Unfortunately, ‘me-too’ investing is eating returns,” he says, suggesting that investors get out of their rut and explore “four relatively underfunded areas that could produce huge winners over the next 10 years.”
How to go from popular to profitable during a downturn
Product-led growth startups are like a car with a manual transmission that needs a push to get going: One driver just can’t do it all on their own.
According to Nick Mills, whose sales experience includes stints at Stripe, Facebook and CircleCI, “all companies eventually face a similar challenge: To keep growing, sales teams must be hired and a pipeline must be built.”
After explaining how to calculate your serviceable addressable market, AKA “the piece of that pie you can win right now,” Mills shows how to define product-qualified leads that will get sales engines firing on all cylinders.
“Telling investors about your viral user growth is no longer enough,” says Mills. “They want to know how it translates to revenue, resilience and runway.”
TechCrunch Disrupt 2022: Taking the BS out of your TAM
Every founder must understand the sector in which they intend to compete, but calculating Total Addressable Market (TAM) is a daunting process, especially for first-timers.
In reality, TAM just is a planning tool that gives potential investors a better understanding of a company’s upside potential.
Next Wednesday, at TechCrunch Disrupt in San Francisco, I’m moderating a discussion with three investors to find out how they approach TAM and what they’re looking for during a pitch:
- Kara Nortman, managing partner, Upfront Ventures
- Aydin Senkut, founder and managing partner, Felicis Ventures
- Deena Shakir, partner, Lux Capital
I’ll ask them to share tactics and strategies for finding TAM, how to calculate it for new products and services, and the red flags they see most often from novice entrepreneurs.
Make sure to bring warm layers if you’re visiting SF for Disrupt — if you can’t make it, please join us online.
6 tips for launching a blockchain startup
It will take much more than a downturn in the public markets, record inflation and global instability to get between blockchain founders and their dreams.
Unfortunately, “having a solid roadmap, real-world use cases and a war chest are only a small part of a blockchain startup’s survival strategy,” advises Wolfgang Rückerl, co-founder and CEO of Istari Vision and Entity.
Although it’s true that many of the skills required to launch an early-stage startup also apply to web3 companies, “the road to achieving success in the blockchain industry is paved differently,” he writes.
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