According to a Capchase report that compares more than 400 SaaS startups to unicorns that have gone public over the past two years, the top performers “handle the Rule of 40,” says Kyle Wiggers.
For those of us who haven’t memorized the economics: The Rule of 40 is a metric that investors have developed to gauge the health and growth potential of SaaS startups. If the company’s combined growth and earnings are above 40%, that’s a good bet.
The Capchase report looks at startups with $1 million to $15 million in annual recurring revenue. According to his findings, SaaS founders should aim for at least 80% and aim to surpass 110%..
“Financial discipline is key here,” said Capchase CEO and co-founder Miguel Fernandez.
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“This includes cutting back on underperforming products, reducing R&D and general and administrative expenses, and doubling down on creative strategies for instant customer acquisition cost recovery to reduce growth-related costs.”
Good news for investors and founders, but a wake-up call for software workers: Aggregator Layoffs.fyi tracked 75 layoffs in May 2022 and 152 layoffs in June.
I remember the fear I felt while working at a startup during recessions when I read about mass layoffs at tech firms that used to be considered up-and-comers. My best advice is to strengthen your network. Find five colleagues you can recommend on LinkedIn, connect with someone you haven’t spoken to in a while, and do your best to focus on the present moment.
And if you’ve ever discussed the idea of starting a company with a friend, consider working on a presentation. You will never know…
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Startup layoffs today have nothing to do with 2020’s correction
Although the rate of layoffs at startups has increased in recent months, they are still well below the rate at which companies cut headcount at the start of the pandemic, reports Alex Wilhelm at The Exchange.
“The 2022 correction is different. It happened more slowly, which gave startups more time to adapt to changing market conditions. And this was preceded by a drop in the public markets, which we believe allowed some private companies to save money in anticipation of, say, a more conservative funding market.”
When it comes to sanctions, PE firms must proceed with great caution.
Banks and other financial institutions must follow know-your-customer (KYC) rules, but private equity funds have a loophole: they are not required by law to tell regulators who their investors are or if they are behaving suspiciously.
However, Russia’s invasion of Ukraine changed the situation.
An increasingly isolated country is now facing international sanctions, and “enterprises are investing in carefully managing compliance programs, policies and procedures in each of their portfolio companies,” writes Snezana Gebauer, partner at StoneTurn.
5 Ways to Seize the Opportunities Created by the Recent Chaos in Ad Tech
TikTok ad sales are expected to triple to over $11 billion this year, surpassing the combined ad revenue of Twitter and Snapchat.
According to Alex Song, CEO and co-founder of data science firm Proxima, this upheaval in media tech stocks creates benefits for early-stage startups “as forced innovation creates a more competitive environment.”
In a guest post on TC+, he shares five strategies for “taking advantage of the turbulent advertising environment.”
Dear Sophie! Does a doctor get a green card faster than an engineer?
My wife and I are from India. I am a software engineer with an H-1B visa. My wife has an H-4 dependent visa. The company that sponsored me for H-1B also sponsored my EB-3 green card, which was approved about three years ago, but I’m still waiting for my green card number. My wife received a work permit and has been working as a doctor ever since.
Can she apply for a green card? Will she get a green card earlier, given her profession? If she applies for a green card, what will happen to my green card?
— humble hubby
Worth watching: Debut Capital’s Pilar Johnson works to increase funding for undervalued founders
For Pilar Johnson, co-founder and managing partner of Debut Capital, the path to investing began after she responded to a Craigslist job ad in a co-working space.
“The job introduced her to the concept of entrepreneurship, and she soon began to explore how founders scale their business,” writes Dominique-Madori Davies in her new series of investor profiles.
Johnson, who lives in Houston, shared her investment thesis and strategies and talked about her efforts to expand the diversity of venture capital.
“If someone is interested in becoming an investor and doesn’t think they have the skills, I would say don’t believe it,” she said. “You can very well become an investor, and it is necessary.”
What to Look for When Hiring a Growth Marketing Agency
As startups of all sizes look for ways to cut costs and expand their customer base, the term “burnout rate” is taking on a new emotional dimension, especially when it comes to hiring consultants.
Growth marketing agencies charge hundreds of dollars an hour, which raises the stakes dramatically when looking for an agency that will meet your company’s specific needs.
In a detailed guide, growth marketing expert Jonathan Martinez shares his criteria for the selection process, presents common compensation structures, and includes some of the essential questions to ask during the screening process.
Pitch Deck Teardown: $7M Wilco Starter Deck
Founders with technical backgrounds would do well to heed one of the main takeaways from Wilco’s $7 million presentation: avoid the trap of focusing too much on product features over product benefits, writes Hadje Jan Kamps.
The “how” will be important, but there is a risk of being tempted to go into details other than what is important to the presentation. “What” is too tactful; it doesn’t really matter for this part of the story what users have to do to get those benefits. Focusing on the “why” is why this slide is so powerful; this opens the door for deeper conversations if needed, but the foundation is already there. I want more startups to get this right!”
How to align the development team with the company’s product vision
As a company grows, teams typically prioritize changing goals as they expand their operations.
However, there is one team that cannot afford to lose sight of your product vision: the development team.
“When you have a development team aligned with the product vision, communication becomes easier and dependency on key stakeholders is reduced as it empowers team members to make decisions,” writes Sanjoy Singh, vice president of engineering at Talentica Software.
“Teams like this think more about improving feature adoption, customer acquisition, and delivering product-centric results, which reduces iterations and production costs, reduces time-to-market, and helps drive business goals.”
Singh explains his four rules for getting development teams to align with the product vision:
- Match individual aspirations with product needs
- Follow the principles of product thinking
- Align business results with the KRA team
- Ensure uninterrupted communication
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