The high gross margins and pure software nature of SaaS companies make them attractive investment options, but the market may be inflated due to investors chasing yield. There is potential for growth, but also the possibility of the market reaching its peak.
David Sacks advises SaaS founders to take seed capital and series A from an experienced, single GP who knows their business category well, and not to worry too much about dilution in the IPO process, but to focus on diversifying stock ownership.
The Cloud industry has drastically changed the investment scenarios with promising growth and high revenue-generating potential. The industry's success with 40-50% year-on-year growth and thriving businesses like Slack, DocuSign and Zoom has led to more investments in this domain.
Microacquire is a platform that allows users to buy small SaaS businesses with recurring subscription revenue for as low as $1,000 or as high as millions of dollars. The size of the businesses on the platform ranges from making $0 revenue with users to ones making hundreds of thousands of dollars, with the majority being in the low-six-figure range.
The guest emphasizes the importance of taking decisions that have a higher chance of being the spectacular outcome versus being cautious and only achieving mediocre results. He emphasizes that the focus should be on the binary outcome, which is either success or failure, rather than on holding on to control or achieving small gains.
According to a Q4 survey of 450 founders, four out of five early stage startups have less than 12 months of runway. Mark Suster predicts a high mortality rate of around 50% for seed and series A and B companies funded in the last four years due to an excess in capital that artificially lowered loss ratios in the last seven years.