How does the SaaS Funding Napkin look like in this crazy year?

If you were hoping that this post would contain the definitive answers to these questions, I’ll have to disappoint you and ask you for some patience. Sorry. It’s not like we have no idea at all — we’ve obviously seen a lot of financing rounds, inside and outside of our portfolio, and we’ve made a number of new SaaS investments ourselves. But we’re hoping that some of the nice people reading this post will help us improve the quality of our answers.

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But let’s take a quick step back. About four years ago, we tried to come up with a back-of-a-napkin answer to the question of what it takes to raise capital in SaaS. The rest is SaaS history. OK, that’s a little pretentious, let’s say it’s napkin history. 😜 In any case, it’s become a tradition for us to ask that question and publish an updated version of the napkin once a year. …


What can we learn from nuclear physics to make pro-rata discussions less radioactive?

One question that inevitably comes up in every investment round (except for a startup’s very first one) is whether existing investors participate in the financing, and if so, to what extent. As Fred Wilson wrote a little while ago, it’s become an increasingly controversial question in recent years and has led to many arguments between founders, early-stage investors, and later-stage investors.

Pro-rata 101

If you’re not familiar with the topic, here’s a quick primer. If you know the basics of pro-ratas, you may want to skip the next few paragraphs.

If a company raises capital by issuing new shares to a new investor, the total share count of the company increases, and consequently, the ownership percentages of existing shareholders decrease. That process is called “dilution”, a term that, before raising my first VC round in 1998, I only knew in the context of homeopathy. Homeopathic dilutions are typically so extreme that not a single molecule from the original substance remains in the solution, which means that homeopathy is a $5 billion business of selling nothing (but water and alcohol). The amount of dilution in a VC round (or any equity financing) depends on the valuation of the company and the investment amount and is typically in the 15–30% range. …


If you’re an early-stage SaaS startup, still in the process of getting to Product/Market Fit, or doing your first experiments to attract and convert leads, you shouldn’t worry too much about customer lifetime value (LTV or CLTV) and related metrics. Sooner or later, you have to develop a good understanding of your LTV, though, since your LTV determines how much you can spend on acquiring a customer. In this post, I’ll look at a few different ways to estimate LTV and will try to explain why your LTV might be higher (or lower) than you think.

The simple LTV formula

The simplest formula to calculate LTV in a subscription business is (Customer Lifetime x Gross Profit), where customer lifetime is (1 / Customer Churn Rate) and gross profit is (Average Revenue per Account (ARPA) x Gross Margin). …


Tips & tricks for better video meetings

If you know Point Nine a bit, you probably know that we’ve always worked as a distributed team and have always had an a̶w̶k̶w̶a̶r̶d̶l̶y unusually geo-agnostic approach to making seed investments. When Pawel and I started P9 almost ten years ago, Pawel was in Berlin, while I was on a sabbatical on Barbados. The first investments that we did together included startups in Canada (Clio) and New Zealand (Vend). We did open an office in Berlin later on but have always kept our remote-friendly culture and our geo-agnostic investment strategy.

One thing that this entails is that I spend a lot of time in video conferences. As I find video meetings with poor audio/video quality really exhausting (and love tinkering around), I’ve become a bit of a go-to-guy for video conferencing technology in my social and business circles. …


From truffle pig to equal partner in four short years

I recently wrote that once in a while, we see a startup and know after the first call that we just have to invest in this company. Similarly, every now and then, when I interview a candidate for a portfolio company, I’m so impressed by the candidate that I’ll send the founder a WhatsApp message with something like “This is our Head of Sales. Let’s close her immediately!!! 👊🏽” before the interview is even finished.

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It’s very rare, but when it happens, it’s an almost magical moment. One such moment occurred to me about four years ago when I interviewed Louis for an Associate role at Point Nine. At that time, we had been looking for our next Truffle Pig for a few months and had a number of very promising candidates on our shortlist. Before my call with Louis, I thought that his engineering background, along with the fact that he went to MIT and worked as a summer analyst at Alven Capital in Paris, made him an interesting candidate who we might want to add to our shortlist. …


Introducing two new partners (and a new fund).

We’ve raised a new fund. If your immediate reaction is “so what?” — bingo. Raising a new fund as a VC is not that newsworthy per se. VCs have to raise a new fund every three years or so, just to stay default alive. However, VCs often use fund announcements to t̶a̶l̶k̶ ̶a̶b̶o̶u̶t̶ ̶t̶h̶e̶i̶r̶ ̶l̶a̶t̶e̶s̶t̶ ̶m̶o̶r̶n̶i̶n̶g̶ ̶r̶o̶u̶t̶i̶n̶e̶s̶ ̶a̶n̶d̶ ̶t̶o̶ ̶s̶h̶o̶w̶ ̶t̶h̶e̶i̶r̶ ̶n̶e̶w̶ ̶P̶a̶t̶a̶g̶o̶n̶i̶a̶ ̶v̶e̶s̶t̶s give an update on the fund’s strategy or additions to the team, so here goes:

(1) We’ve raised €99,999,999.

Someone asked if there were any regulatory reasons for staying below €100 million. Nope. We just like the number 9.

A huge thanks to all of our LPs for their continued trust…


Two years ago I went out of my little SaaS box and embarked on a journey to explore the cultivated meat landscape. Armed with no knowledge of biology, but a lot of curiosity and passion, and a Venture Partner (Nathan Benaich) who has a PhD in biology and experience working with stem cells and cell culture, I took a deep dive into the fascinating technologies behind the future of meat. A few months later, we co-led Mission Barns’ seed round alongside Air Street Capital (Nathan’s new fund), Purple Orange Ventures, and Better Ventures.

At Point Nine, we’re pretty adamant about our strong focus on early-stage B2B SaaS and B2B marketplace investments. We’re convinced that in order to be good at what we’re doing, we have to say “no” to lots of interesting opportunities — whether that’s raising a growth fund, hiring a lot of new people, or investing in areas that we don’t understand. …


On WFH, zoomalternative.com, and being late to Clubhouse

If you know Point Nine a little bit you might know that we’re extremely excited about video conferencing technology, and more broadly, about how video as a medium is transforming everything from education and entertainment to communication and marketing. …


The state of fundraising in the spring of 2020, in 12 simple charts

At last week’s virtual SaaStr Summit I did a presentation about “Fundraising During a Pandemic”. If you’ve missed it and you’re interested in the topic, here’s a recording:

Given that we have a global pandemic and are likely heading into the deepest recession since World War II, it’s obviously not a great time to fundraise. At the same time, tech companies are better off than any other industry, and, to answer the question posed in the headline, VCs are still investing (we’re one of them). …


There is this idea in the VC community that investors usually know after the first meeting (or maybe even after the first five minutes) if they want to invest in a company. According to that view, everything you do after that first meeting is to selectively collect evidence that supports your opinion (AKA confirmation bias).

There’s some truth to that logic, but it is an exaggeration. More often than not, it takes much longer to understand a market, get to know the founders, and develop the conviction needed to make a large bet. …

About

Christoph Janz

Internet entrepreneur turned angel investor turned micro VC. Managing Partner at http://t.co/5WJ3Pepbcv.

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