SaaStr CEO and Founder Jason Lemkin has seen so many Founders sign a bad term sheet based on gut instinct, VC celebrity or vibes, and while that may be fine, it’s not enough. A bad investor doesn’t come off the cap table until you sell the company or years after an IPO. And so much happens in that time, in that decade or more. So here are 11 ways to help you avoid bad investors.
Dear SaaStr: What Percentage Owership Do Venture Capitalists Want in Start-Ups? Roughly, it varies by stage, and how big the firm is. The earlier the stage, the more they want to own. And the bigger the firm, the more they want to own: Most Big VC Firms ($600-$2b+...
Dear SaaStr: From a startup’s point of view, is it better for the investors to approach founders or founders contacting the investors for initial investment? If the founder approaches the investor, does it make them look desperate? 99% of the time — don’t play games....
Dear SaaStr: What Happens When a VC Fund Invests in a Startup? Answer: The clock starts ticking. As soon as a VC invests, the follow calculation begins: Can the company grow fast enough, and accomplish enough, before running out of money, to raise the Next Round at...
We’ve talked a lot on SaaStr about the challenges in getting from nothing to that first $1m-$1.5m in ARR, “Initial Traction”. That it takes longer than you think. That if you get 10 customers, you can get another 10, 100, and so on. There’s a...
Christoph Janz, partner at Point9 Capital, discusses key metrics and strategies for SaaS companies aiming to secure Series A and Series B funding in 2024.
At least up until $10m-$20m ARR or so, If you haven't gotten your investor updates out by the 10th of the month, VCs assume it's not good If you haven't gotten your investor updates out by the 15th of the month, VCs assume there's trouble — Jason...
Dear SaaStr: What are The Pros and Cons of Raising VC Money from a Corporate VC? The pros, and the cons, are both limited. The issues here are smaller than they used to be. Cons: Usually won’t carry the company or write many “second checks”. So not an ideal lead...
Dear SaaStr: When My Startup Raises $10m, Would It Be Appropriate to Take a $170k Salary (no co founders)? Yes, not a problem. You should take a “market correct” salary as soon as it’s economically immaterial to the company. I don’t write $10m...
Dear SaaStr: Should You Always Ask a Co-founder to Invest Their Own Money? No. Especially if they haven’t really made any money yet, and you have more. In both my start-ups, I was the only founder to contribute cash. It didn’t matter. Yes, you need money one...
Dear SaaStr: I Just Sent a Email to a VC with Two Typos. Should I Resend It? No, no, no and no. First, VCs want to see strength. Not arrogance usually, but strength. Some whimpy email apologizing for some typos isn’t strength. Second, it shows poor prioritization....
A few “rules” in raising venture capital that founders somehow … seem to constantly miss. Or get wrong: If your existing investors have a strong brand and aren’t positive on you, it can much harder to raise. At a minimum keep them in the loop. Don’t just ignore them...
Year after year, 100s and 100s of VCs show up to SaaStr Annual locked and loaded, term sheets in hands, on the hunt for soon-to-be Unicorns to add to their portfolios. From the Founding Partners, Managing Directors and big name SaaS VCs who grace the stage. to the...