Venture

VC investors and startup founders see hope in the red wave that wasn’t • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in 2022 midterm elections, EC venture capital, Government & Policy, Politics, Startups, VentureNo Comments

Janna Meyrowitz Turner’s biggest concern going into the U.S. midterm elections was that more than half of American voters had an election denier on their ballot. She was quite nervous, alongside pundits and polls who expected a red wave, a conservative flush that would take hold of Congress, state legislatures, and city halls. That didn’t happen. Instead, many candidates backed by Donald Trump failed to garner voters. Pro-abortion, anti-slavery, and pro-marijuana proposals passed while a young and diverse crop of politicians were elected at federal, state, and local levels. The red scare was nipped. For now, at least. “By and large, these candidates lost and will continue to do so,” Turner, the founder of Synastry Capital and co-founder of the coalition VCs for Repro, told ZebethMedia. “Despite the deliberate barriers to keep Black, brown, young, and new Americans from voting, these folks turned out in record numbers, which means our government will start to better reflect our citizens.” All in all, Democrats fared better than expected and are predicted to maintain control of the Senate, while Republicans are favored to take hold of the House. ZebethMedia conducted a vibe check with investors and founders to gauge how they feel as results continue trickling in. Many were happy with the progress being made, while others spoke of the issues they aim to tackle next as calls increase for progressive investors to start speaking up. “Democracy was the real winner last night, which is the underpinning of everything.” Jana Meyrowitz Turner, investor, Synastry Capital Naturally, one issue on everyone’s mind was abortion. Voters in many states had to vote on abortion-related proposals since the overturn of Roe v. Wade left such decisions in the hands of states. Shortly before the midterm elections, more than 100 VC firms came together to create VCs for Repro, a coalition rallying investors to vote in favor of reproductive health and wield more of their sociocultural power for change. Ballot results show that VCs for Repro’s cries were part of a larger clamor to protect reproductive autonomy. Kentucky voted against amending its state constitution to say that there was no right to abortion; Vermont, Michigan, and California voted to make reproductive freedom a constitutional right. Turner noted that pundits and polls drastically underestimated how much Americans support abortion. If it wasn’t clear then, though, it is now.

Will the FTX debacle scupper crypto venture dealmaking? • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Binance, blockchain, Crypto, EC Blockchain, EC Cryptocurrency, EC Newsletter, EC venture capital, FTX, The Exchange, Venture, venture capitalNo Comments

The dramatic fall of FTX is taking with it more than just the paper wealth of one of crypto’s most colorful players. Given the amount of invested capital that may be incinerated in the crypto exchange’s anticipated sale to rival Binance, it’s hard not to wonder where venture goes next in web3. FTX is no longer set to generate massive investor return when it goes public; instead, backers of the exchange are concerned that their investment could go to zero in the Binance transaction. The potential sale of FTX to the larger exchange may save the brand — there’s a lot we still don’t know about its health sans rescue — but it is not clear if any of the capital pools that helped power its rise will get their money back. The Exchange explores startups, markets and money. Read it every morning on ZebethMedia+ or get The Exchange newsletter every Saturday. The scale of the potential losses is staggering. FTX’s mid-2021 funding round was something that it described at the time as the “largest raise in crypto exchange history,” for example. The $900 million round valued the company at around $18 billion. The boast about the round now sounds more like a threat, at least from a venture returns perspective. “Over 60 investors participated in the $900M Series B,” FTX wrote at the time, noting that “Paradigm, Sequoia Capital, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Third Point, Lightspeed Venture Partners, Altimeter, BOND, NEA, Coinbase Ventures, Willoughby Capital, 40North, Senator Investment Group, Sino Global Capital, Multicoin, the Paul Tudor Jones family, Izzy Englander, Alan Howard, VanEck, Hudson River Trading, and Circle” put capital into the round.

Web3 messaging infrastructure Notifi raises $10M seed round co-led by Hashed, Race Capital • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Crypto, crypto startups, Hashed, Race Capital, Startups, Venture, web3 messaging infrastructureNo Comments

Notifi, a communication infrastructure platform for Web3, said Tuesday it has raised $10 million in an oversubscribed seed funding co-led by previous backers Hashed and Race Capital. Other investors include Struck Capital, HRT Capital, Wintermute, Superscrypt founded by Temasek, bringing its total funding to $12.5 million. The ten-month-old startup wants to address the broken communication model in Web3, which is fragmented across multiple application and messaging platforms like Telegram, Discord and Twitter and across layer-1 and layer-2 blockchain ecosystems. Notifi provides communication infrastructure and software development kits (SDKs) for decentralized applications on blockchain platforms with simplified and customized notifications. Its platform allows Web3 developers to integrate multichannel communication into their applications without building the infrastructure themselves. “Notifi is similar to Twilio, but unlike Twilio, Notifi has built a Web3-native solution for blockchain developers that enables both on-chain and off-chain messaging across multiple layer-1 ecosystems,” co-founder and chief executive officer of Notifi Paul Kim told ZebethMedia. Kim and Nimesh Amin (CTO), who previously worked at Amazon Web Services and Oracle Cloud, founded Notifi in January. Kim said its team is comprised of builders of Web 2 infrastructure, so they understand the importance of building and running services at scale with reliability, security and performance. The startup targets the Web3 ecosystem and all Web2 addressable users. “We’re taking a pragmatic approach to solving the right customer and user pain point rather than building something no one asked for,” Kim continued. “This is why we support both on-and off-chain messaging. Not everything has to be decentralized. As Web3 goes mainstream, the next wave of users will want a simple text or email alert when something important happens.” Notifi, which launched its SDKs in April this year, has more than 25 customers, including Orca, one of Solana’s biggest DEXs; Zebec, treasury management for DAOs; SynFutures, Polygon’s largest derivatives protocol; Hyperspace, an NFT marketplace; Realms, Solana’s DAO governance platform, and more, Kim said. Notify will soon launch Notifi Hub, the Web3 inbox to aggregate cross-chain notifications and messaging into one single hub, which is currently in beta, to provide users with a centralized location to track and manage all of their messages and alerts across different blockchains, wallets and dApps. Image Credits: Notifi Notifi now supports Solana, NEAR and Ethereum and is expanding to Polygon, Avalanche, Aptos and Sui. The company’s initial launch partners include SynFutures and ZeroSwap on Polygon; Pocket Worlds on Avalanche; Pontem Networks, Aries Market, and Ethos Wallet on Aptos and Sui. The funding will help Notifi expand support into other layer ecosystems and provide developers with more tools to enable advanced user experience. In addition, it plans to hire and scale its team to meet new needs of its product lines, such as notifications as a service, chat as a service, customer relationship management (CRM) and analytics tools for product messaging, and more, Kim said. The company may face competition with XMTP and Dialect in the Web3 messaging space. Its differentiator is Notifi’s product is designed to allow for highly customizable experiences that dApps can implement and manage, Kim said, adding that the user experience developers can offer messaging and notification functionality within their native UI with a user experience that feels native to their app or platform. “Paul and Nimesh bring years of infrastructure experience from Amazon Web Services, Microsoft, Oracle and Circle to Web3,” general partner at Race Capital Chris McCann said. “We at Race Capital could not be more thrilled to partner with them in this new round of seed funding and to support them on their mission to empower all Web3 builders to better communicate and interact with their users.” “Notifi has a bold vision to make communication as easy to set up and maintain as a web application,” said partner at Hashed Baek Kim. “They’ve built a clever, intuitive interface that simplifies the extreme complexities involved in building cross-chain messaging and have received many early accolades from layer 1 blockchains and Web3 developers.”

Binance chief says FTX going down ‘not good for anyone’, warns of greater regulatory scrutiny • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Binance, Changpeng Zhao, Crypto, FTX, VentureNo Comments

Binance founder and chief executive Changpeng Zhao says FTX “going down is not good for anyone in the industry,” and the ongoing episode has “severely shaken” the confidence of consumers, a day after the world’s largest exchange signed a non-binding agreement to acquire its most formidable rival firm. Zhao said the sudden liquidity crunch at FTX will attract greater scrutiny on crypto exchanges from regulators. “Licenses around the globe will be harder to get. And people now think we are the biggest and will attack us more,” he said in a note to employees Wednesday, before publicly tweeting it. The billionaire, widely considered as the most powerful man in crypto, also asked the employees to not trade FTT, FTX’s native token. “I asked our team to stop selling as an organization. Yes, we have a bag. But that’s ok. More importantly, we need to hold ourselves to a higher standard than even in banks,” he wrote. The FTT token has fallen about 70% since Tuesday, now trading at about $4.5. Binance announced on Tuesday that it had signed a letter of intent to acquire the three-year-old firm FTX, delivering a shocking twist to the public spat between the world’s two largest crypto exchanges. Zhao said Binance reached the decision after the three-year-old exchange FTX’s chief executive Sam Bankman-Fried reached to him and sought help. Binance, the world’s largest crypto exchange, is the first investor that backed FTX, but as the younger firm grew in popularity, the relationship between the two started to wither. The firms haven’t disclosed the financial terms of the deal, but it is likely utterly terrible for investors of FTX, which was valued at $32 billion in a financing round earlier this year. The two executives had been hurling snarky remarks at each other for several months, but the relationship hit an all-time low earlier this month after Zhao said that Binance was selling its holdings of FTT, the native token of FTX exchange, that it had received as part of an exit from the firm last year. Zhao said the firm was liquidating its FTT holdings as a “post-exit risk management,” giving some credence to a widely circulated rumor about Alameda Research’s concerning financial health. Alameda and Bankman-Fried had earlier refuted such concerns. The Binance founder asserted that he did not “master plan this” deal or “anything related to it.” And urged employees to not view this deal as a “win for us.” “It was less than 24 hrs ago that SBF called me. And before that, I had very little knowledge of the internal state of things at FTX,” Zhao said. “I could do some mental calculations with out revenues to guess theirs, but it would never be very accurate. I was surprised when he wanted to talk.” Binance is the world’s most valuable crypto exchange, estimated to be worth over $300 billion. FTX was valued at $32 billion in its most recent funding round (a Series C) in January this year. The firm counts Sequoia, BlackRock, Tiger Global, Paradigm, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Lightspeed Venture Partners, Altimeter Capital, Coinbase Ventures, Sino Global, Bond and Iconiq Growth among its long list of backers. FTX and its FTX US business raised over $2.2 billion across several funding rounds, according to Web3 Signals, a crypto dealbook. Tuesday’s announcement shocked the business world and even the crypto community, which has grown accustomed to topsy-turvy developments this year. Bankman-Fried was hailed as a crypto savior earlier this year after he bought a series of firms. FTX Ventures, the ventures arm of the crypto exchange, is also a major investor in a large number of crypto startups including Aptos Labs, Messari, Sky Mavis, LayerZero, YugaLabs and 1inch Network.

Ping wants to simplify global payments while helping Latin Americans embrace crypto • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in bank transfers, Fintech, latin america, ping, VentureNo Comments

If the global pandemic taught us anything, it’s that you could work from anywhere as long as you had a computer and good wireless signal. However, getting paid when you live, say, in Argentina but work for a company on the other side of the world is not so simple. Many fintech startups have taken on this challenge, including Ping. The company was started in 2021 to solve payment challenges in Latin America, where about 70% of the population does not have a traditional bank account. Today, it is a digital payment tool, available on Android, iOS and desktop, facilitating international payments for remote workers, contractors and freelancers in both their local currency and in fiat and cryptocurrency. Ping users create a free account in U.S. dollars to receive bank transfers in either their local currency or crypto, including Bitcoin, Ethereum and Litecoin. It also provides an invoicing system so that freelancers and contractors can send invoices to their employers. The company makes money from fees from its professional tier. The company was founded by Argentine natives Pablo Orlando, Mary Saracco and her brother, Jack Saracco. The team has a heavy background in both cryptocurrency and finance, having worked previously at organizations such as UBS Investment Bank, World Bank, Deloitte and the Stock Exchange of Buenos Aires. When more Latin Americans were working from home following the pandemic, Mary Saracco said the company realized how important it was to have a stable way to get paid amid inclusionary countries — and unstable economies made earning in U.S. dollars “extremely appealing.” “Then we said, ‘okay, there are clearly a lot of people working remotely in Latin America looking for higher paying jobs in dollars. Why don’t we help people?’” she told ZebethMedia. Ping is now being used in 16 countries. That’s also when Jack Saracco’s background in crypto came into play. He led the building of the company on the rails of Latamex, Latin America’s largest fiat-to-crypto gateway that provides what he told ZebethMedia is a safe option for users to buy and sell crypto from exchanges like Binance. The possibility of opening a U.S. bank account or a crypto account and receiving a payment in U.S. dollars while also seamlessly swapping from one to another and making withdrawals in any country was “certainly an interesting niche market that’s growing in the region,” Jack Saracco added. That combination of payment from anywhere and the ability to operate in crypto seems to have caught on early for Ping. The platform launched four months ago, and within its first month of operations, the company generated over $1 million in payment volume, CEO Pablo Orlando told ZebethMedia. He also said that it’s too early to discuss much of the company’s traction but did say that users are coming back monthly, and in some cases within 15 days to use Ping again. The company is now also working off of $15 million in seed funding from a group of investors, including Y Combinator, Race Capital, BlockTower, Danhua Capital, Signum Capital and Goat Capital. The funds will be deployed into team expansion, including hires for marketing and sales, and into product development in what will become a premium feature that will be a monthly subscription. Mary Saracco expects that to launch in March.

Tiger Global taps TCV partner Rohit Iragavarapu • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in tiger global, VentureNo Comments

Tiger Global is adding Rohit Iragavarapu, the partner at TCV Capital involved in deals such as Gitlab, Attentive, Toast, LegalZoom and Avetta, to its investment team, two sources familiar with the matter said. Before joining TCV in 2019, Iragavarapu worked at TPG Global and Morgan Stanley, according to his Linkedin profile. He starts his investor role at Tiger Global in the coming weeks, sources said. Tiger Global declined to comment Tuesday. Iragavarapu did not respond to a LinkedIn message. Iragavarapu’s arrival comes as the New York-headquartered hedge fund navigates one of its most challenging periods in two decades of its existence. Tiger Global’s hedge fund unit has lost more than half of its value this year. John Curtius, who oversaw many of the SaaS deals at the firm, left last month.

Sweden’s EQT Ventures closes a its third fund at €1.1B to double down on European and early-stage startups • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in early stage, eqt ventures, Europe, VentureNo Comments

Startups might be in a funding midwinter, but the ray of sun shining on some VCs speaks of a different trend. EQT Ventures, the venture fund arm of Sweden’s investment giant EQT making early-stage bets on startups primarily in Europe, has closed its latest fund and filled its coffers with 1 billion euros (and $1.1 billion in total commitments). This brings the total raised by EQT to €2.3 billion since the EQT Ventures launched in 2016. To date, the firm has backed some 100 companies, with 18 exits and nine “unicorns” (Wolt, Small Giant Games, Einride, Handshake, Netlify and Instabox/Instabee are in that group). This third fund fund was raised and closed relatively quickly, between February and June of this year (with final paperwork coming in since then), and there have been some 13 investments made out of it so far, Juni, Nothing, Knoetic and Candela among them. The larger EQT has emerged as one of the key deal makers in recent months where larger privately-held companies have been looking for funding and/or exit opportunities. These have included the recent purchase of New Jersey-based Billtrust for $1.7 billion and leading an investment round for Knoetic. But it has also put money where its mouth is, so to speak. Earlier this year sister subsidiary EQT Growth announced a $2.4 billion fund largely aimed at scaling startups out of Europe. Growth has backed the likes of Vinted, Epidemic Sound and Mambu. The plan will be to use this latest EQT Venture fund for similar geographical ends: the firm wants to use it to make investments of between $1 million and $50 million, with about two-thirds of all investments falling in Europe, and the rest across the U.K. and the U.S., said Lars Jörnow, a partner at the firm. In terms of categories, EQT Ventures will remain generalist but ideally is on the lookout for startups that address “where society has problems,” Jörnow said. That includes greentech investments, transportation and the future of work, he said (specifically areas like tools and platforms for freelancers). The firm’s close of the fund speaks to what appears to be a bifurcation in the world of tech investing. While funds and firms that focus on much larger and later stage companies might be seeing big losses in their portfolios, there remains confidence among those that back the funds, the limited partners, that investors focusing on earlier (and smaller) stages still have a lot of opportunity ahead. “The higher the valuation before the contraction, the bigger the fall,” he warned. It helps too to have a history of good bets. Jörnow noted that the company’s target had actually been €900 million. His takeaway of the relatively quick close and exceeding that figure: “Investors think it’s a great idea to back VCs that are investing in early stage with a much longer holding period,” he said. On average, EQT expects exits to be made in 2031, “when the world will look different than today,” he added. “If you back the best founders, they will grow startups regardless of the current macro climate.”

Binance says it will buy FTX after smaller rival stumbles through ‘liquidity crunch’ • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in Daily Crunch, Startups, Venture, venture capitalNo Comments

To get a roundup of ZebethMedia’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here. Today, we’ve been learning about what the hell a Mastodon even is, so the timing of Amanda’s piece ‘A beginner’s guide to Mastodon’ is all sorts of perfect. Give it a read, and come find us on Mastodon after. If you can — that’s another challenge. We have faith in your cyberstalking skills, but here’s a hint: Both of us are on Mastodon.Social. — Christine and Haje. The ZebethMedia Top 3 This surprise was off the chain!: In a surprise twist today, Binance announced its intent to acquire FTX in a move that will clear out some of the “liquidity crunches” that FTX founder Sam Bankman-Fried tweeted about, Manish reports. This comes after the two companies’ founders had a very public spat recently. (More on that in Big Tech Inc. below). Roll out: Over in ZebethMedia+ land, Becca writes about what Peloton co-founder John Foley has been doing. Apparently, he “is a rug guy now.” Also, as Becca points out, his new company, Ernesta, is another example of VCs investing in people they knew, even if their last company flailed some. A list that changes every day: Hey, fellow Twitter users, are you on Team Verify or Team Leave My Stuff Alone? Either way, Ivan has a list of features Elon Musk has promised to bring to Twitter. Startups and VC Though finance technology startups are having a moment when it comes to decreased venture capital deals and layoffs, Quona Capital, a venture capital firm that invests in emerging markets that accelerate financial inclusion, has found the appetite is still there for fintechs, Christine reports. The firm had its final close on $332 million in capital commitments for its Fund III, which focuses on financial inclusion. Also from Christine today (in addition to our resident Daily Crunch newsletter wrangler, she’s a post-writing machine!) is a piece about Doola, a company helping global founders start a limited liability company in the United States, even without a Social Security number. The company raised an $8 million round of funding, less than a year after it raised $3 million worth of seed funding. A handful more, because we love ya: Here’s the rundown on the Binance and FTX fiasco Image Credits: wenjin chen (opens in a new window) / Getty Images Today we learned that the world’s largest crypto exchange is bailing out the world’s third-largest crypto exchange. But why? In a detailed explainer, Jacquelyn Melinek wrote about how a CoinDesk report last Thursday on crypto trading firm Alameda Research led Binance to liquidate a mountain of tokens that backed many of Alameda’s loans. Three more from the TC+ team: ZebethMedia+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription! Big Tech Inc. As promised from above, Jacquelyn dives deeper into some of the things going on at FTX, including that the crypto exchanges withdrawals seemed to be sluggish. And that its potential new owner, Binance, was going to “slowly withdraw billions of its holdings in FTX’s native token, FTT.” Oh, you two! And we have five more for you: Who’s got a new trivia game?: It’s Netflix! The streaming service is trying its hand at a new trivia game — remember its venture into “Trivia Quest”? The new one is an interactive trivia experience called “Triviaverse.” Lauren has more. Video, email, calendar: Zoom is adding email and calendar to its features lineup, a move Ron reports is its chosen avenue, for now, as the company looks to expand its offerings. Stepping down: Grab Financial leader Reuben Lai is planning to leave the company at the end of the year, Catherine writes. It’s a party, a third-party, that is: Third-party merchants in India can now have Amazon-like logistics power thanks to the delivery giant opening it up to them, Manish writes. Don’t ever say you’re left out: European Union investigators now plan to take an even deeper dive into Microsoft’s $68.7 billion bid to acquire Activision and what it could mean for competition, Natasha L reports.

H-1B worker layoffs, cyber risk quantification, SaaS whiplash • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in cybersecurity, EC roundup, immigration law, Layoffs, Startups, TechCrunch Disrupt 2022, VentureNo Comments

Dear Sophie, I was laid off and I’m on an H-1B. I have enough savings to survive for a while. What should I do if I have been let go from my job? I am on an H-1B, have an approved I-140 and an I-797 that expires in March 2024. If I have to leave the U.S., can my current I-797 be transferred to my next employer? Are there any issues I should be aware of? — Upended & Unemployed The seasons won’t change for another 43 days, but in San Francisco, it already feels like winter. As an offshore weather system brings gusts and downpours, local employers like Twitter, Lyft, Stripe, Brex, Opendoor and Chime are laying off thousands of employees. This week, Meta will reportedly announce the first large-scale staff cuts in its history. Full ZebethMedia+ articles are only available to membersUse discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription For tech workers who are immigrants, this is an especially fraught time, as their ability to remain in the U.S. is conditional on their employment. Most visa holders have a 60-day grace period after an unexpected layoff, but with thousands of skilled workers hitting the market at once, the clock is ticking. We usually run Silicon Valley-based immigration attorney Sophie Alcorn’s column on Wednesday, but in light of current events, we ran it yesterday (without a paywall). First order of business: if you’ve been impacted, don’t delay. Start looking now for a new position, and tell everyone in your network that you’re open to work. “At a job interview, be direct about your need to transfer your H-1B to a new employer. If the company is not willing to sponsor you, move on,” advises Sophie. “Ideally, you should accept a job offer no more than 45 days into your 60-day grace period unless you have applied for another fallback status because it can take several weeks to prepare and file the H-1B transfer.” Brace yourself: more layoffs are coming. Update your resume, save as much money as you can, and most importantly — don’t panic. Thanks for reading, Walter ThompsonEditorial Manager, ZebethMedia+@yourprotagonist 2023 will be the year of cyber risk quantification Image Credits: Olemedia (opens in a new window) / Getty Images Myriad factors determine a company’s valuation, and cybersecurity is one of them. Public companies that experience a breach tend to see a -3.5% drop in stock value after the news goes public. That’s why cyber-risk quantification (CRQ) “has slowly grown from a nice-to-have to become the foundation for addressing the most critical concerns about a business’ cybersecurity posture,” writes John Chambers, founder and CEO of JC2 Ventures. How ButcherBox bootstrapped to $600M in revenue Mike Salguero at ButcherBox’s dry ice factory Grocery delivery service ButcherBox ran a Kickstarter campaign in 2015 to identify customers who wanted to receive 100% grass-fed beef. Since then, the company “has seen $600 million worth of revenue without taking a penny of external investment,” reports Haje Jan Kamps, who spoke to CEO and co-founder Mike Salguero about how the founding team bootstrapped their D2C startup. “I was meeting meat farmers in parking lots, buying a couple of trash bags full of meat — I’m sure that didn’t seem sketchy at all,” he said. “But it was too much meat for my freezer, so I ended up selling the excess meat to friends or people I was working for.” New data show how SaaS founders have been dealing with whiplash from public markets Image Credits: puruan / Getty Images According to OpenView Venture Partners’ 2022 SaaS benchmarks report, “an overwhelming majority of respondents are slashing spending regardless of cash runway.” In this year’s survey, which covered 660 companies, OpenView operating partner Kyle Poyar and senior director of growth Curt Townshend found that “the rule of 40 is back,” as the need to generate profits has overtaken investors’ obsession with growth. “Achieving 40 each quarter is not required,” they concluded. “But it is required to have a grasp on what caused a drop or spike, and what can be done to get to 40 long term.” How to land investors who fund game-changing companies Image Credits: Kelly Sullivan / Getty Images A SaaS startup can conceivably find product-market fit within a few months of launching, but companies that work with hardware and robotics may wander in the pre-revenue wilderness for years. To learn more about how investors approach risk when it comes to emerging technology, Tim De Chant moderated a panel at ZebethMedia Disrupt with Milo Werner (general partner, The Engine), Gene Berdichevsky (co-founder and CEO, Sila) and Erin Price-Wright (partner, Index Ventures). “Hire people to do the technical stuff,” said Berdichevsky. “Keep an eye on it, but then go learn the other pieces.”

What’s the right NDR target for SaaS startups? • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in EC Newsletter, EC venture capital, Enterprise, openview, SaaS, Startups, The Exchange, VentureNo Comments

Why are software companies valuable? Put another way, why have we spent so many years valuing software companies using revenue multiples, instead of the profit multiples that are more common in other industries? There are several key reasons. First, software companies have very strong gross margins; software is cheap to sell once you’ve written the code. Secondly, and more to the point today, is the fact that modern software companies are set up to sell more of their product to existing customers over time. This is often achieved through selling more seats (individual use licenses) to extant accounts or, in the case of on-demand pricing, more total usage of a service over time. Regardless of the method, what matters is that software companies today tend to see limited gross churn (customers dropping their contracts) and positive net dollar retention (the sale of more product to existing customers over time). The Exchange explores startups, markets and money. Read it every morning on ZebethMedia+ or get The Exchange newsletter every Saturday. Net dollar retention (NDR) is, essentially, gross churn from existing customers plus upsells from the same, measured over a set time period. The resulting metric, measured in a percent of prior revenue, helps investors understand just how much built-in growth momentum a company has. The greater net dollar retention that a software company has, the more efficient its growth will be (selling more stuff to already-landed customers is cheaper than securing net-new accounts). NDR matters, and investors, focused on more efficient growth than last year, are likely putting more emphasis on the metric. So, what should startups target when it comes to NDR results? Even more, do those expectations match what startups are actually reporting? And who has better net retention, public software companies or their startup rivals?