Most SaaS companies provide tools to help people accomplish a goal in a better way than they could before. A key part of a SaaS startup's toolkit, then, is changing end user behavior. A startup that doesn't change the behavior of a customer will see the customer churn in a few months or at the expiration of their contract. Customers don't change their behavior for many reasons. Sometimes the friction to adopting a new workflow is too great. Other times, the value proposition isn't compelling enough for users. Or, the use case is too infrequent for users to remember to change behavior.
Over the last 12 years, the number of startups founded has grown each year by 25%, according to Crunchbase data. That's quite an acceleration each year! As the number of companies in a sector grows, do the odds of successfully raising capital decrease?
Raising capital from venture capitalists at any stage can seem like a very strange, ambiguous and amorphous process. I've written about the way Redpoint diligences/researches a startup and its market and what questions we tend to ask at each stage. In this post, I'll focus on the process from entrepreneur's point of view.
The process of creating the right culture in a startup has always been mysterious to me. Each company's culture evolves in its own way. I've wondered whether the culture is set by the personalities of the founders, or prominently displayed value statements and mission, or biases purposely imposed in the hiring processes like Google's googliness filter. Or is understanding the psychological forces at play among employees the most important element?
A few days ago, Simply Business published an infographic and data on the acquisition patterns of Amazon, Apple, Facebook, Google and Yahoo. Looking at that data, I wondered which acquirers pay the most for startups. Ideally, this data provides some negotiating leverage to founders selling their businesses.
From zero to $19B of business value in five years; WhatsApp's sale to Facebook is an important moment in the history of the consumer web. The deal proves distribution, reach and large user bases aren't the competitive moats they once were. Apple's App Store and Google Play have leveled the playing field to such an extent that a startup can command 10% of the market cap from a $200B company.
When a startup is confronted with the prospect of hiring a head of marketing, founders heads often spin. What should be the day-to-day tasks for this person? What skill sets are important? Because of the seeming abstract nature of marketing, founders sometimes delay finding a head of marketing until they feel acute pain, at which point they can clearly identify the attributes of the right candidate. But underinvestment in marketing, like underinvestment in infrastructure or software or product, isn’t a good idea
Great entrepreneurs can come from anywhere. But do the locations of startups affect their ability to raise follow on capital? Do seed stage companies in the Bay Area face lower likelihoods of raising a Series A because of more competition? Or is it that New York based startups, because of a smaller ecosystem, face more difficulty?
When presented with figures and numbers and statistics, it's easy to take the conclusions as fact. Numbers in a spreadsheet carry a finality, a exactitude that bely how inaccurate they can be."
Has it become harder to raise money? is a question I hear all the time. On one hand, the total dollars invested by VCs is relatively flat at just under $30B per year, according to the NVCA. On the other hand, the stories of difficulty raising series As and Bs have become a steady drumbeat."