Every year Pitchbook and the National Venture Capital Association (NVCA) publish a comprehensive report on the VC industry. The report includes data on angel & seed-stage funding as well as late-stage VC rounds. It includes data about regional VC trends, venture debt, female founders, the spike in VC exit valuations, and the 2021 VC league tables.
In 2021 there were a record 3,400 software M&A deals. There are a lot of reasons companies do M&A. Increasing revenues, increasing market share, accelerating product roadmaps, and growing competitive differentiation are common drivers. A key aspect is the ability to cross-sell. Cross-selling the acquired company’s products into your existing customer base is one opportunity. So is selling your core products into the acquired company’s existing customer base. Revenue from cross-selling is an important factor in almost every M&A financial model, yet many companies struggle to achieve cross-selling objectives. Cross-selling is critical for SaaS revenue growth.
The Software Equity Group (SEG) regularly publishes quantitative research on the software and SaaS market M&A activity. The SEG SaaS Index contains dozens of publicly traded SaaS companies. They recently published their 2022 Annual Report. It provides a ton of data on SaaS valuations and financial operating metrics.
Recurring revenue is a core metric for SaaS companies. It drives valuation, funding, and success. Revenue retention is a major concern for product managers. They need to understand what is going on with the revenue streams from their existing customers. Logo retention, Gross Retention, and Net Dollar Retention are three critical metrics. For private companies in 2021, the median Gross Retention was between 88% and 90%. The median Net Dollar Retention was between 60% and 148%. For public SaaS companies the median Net Dollar Retention rate was 114%.
The Software Equity Group (SEG) regularly publishes quantitative research on the software and SaaS market M&A activity. The SEG SaaS Index contains dozens of publicly traded SaaS companies. The SEG SaaS Index: November 2021 Monthly Update contains data on median Enterprise Value/Revenue multiples, key SaaS metric by SaaS market, and the performance of the top/bottom 25 pubic SaaS companies in the SEG SaaS Index.
I belong to a Facebook Group called Product Management Memes. It has over 3,900 members and is simply a meme stash for product managers, marketers, and corporate life. People post amusing stuff every day. There’s no self-promotion or spam, just entertainment. Here are 15 of the most popular posts from the past few weeks based on likes and shares.
A reprint of a story I wrote in 2009 to celebrate one of my favorite traditions – The Santa Hat Believer’s Club.
OpenView Partners is a Boston-based expansion stage venture capital firm. They have a portfolio of SaaS investments that consists of over 60 companies. 24 have been acquired (Exact Target, Lessonly) and two have gone public (DataDog & Instructure). OpenView Partner is a huge proponent of the Product Led Growth (PLG) movement. They also regularly publish financial and operating benchmarks for SaaS companies, including product led growth companies. In November they published the 2021 version of the report. It includes 17 financial and operating metrics, many segmented by company revenue size.
AI writing tools are here to stay. Market leader Grammarly just raised $290 million at a $13 billion valuation. Microsoft invested $1 billion in OpenAI and its GPT 3 technology. I have seen firsthand the benefits of basic AI-enabled writing tools. On a year-to-date basis, my blog traffic is up 21%. While AI writing tools may have some drawbacks, they are not going to conquer the world.
Revenue churn is a major challenge for any B2B SaaS product manager. Every month and year customers decide to stop paying for your product. While some of the churn is involuntary (business closed, merger/acquisition, etc.), the majority is voluntary. Customers decide for a number of reasons not to continue using your product. Product Managers need to understand the scale and why do your B2B SaaS customers churn.