As you know, we focus on Enterprise IT, a $1Trillion dollar market in the US alone.Within this space, we continue to see many areas of massive potential and innovation.This ven diagram shows the sectors we are focused on today with the Enterprise customer at the center. As you can see there is certainly some overlap amongst them. For example, Network Intelligence, a security company, was both a data analytics company and a security company.We have been investing in these sectors for a number of years now, but there is far more to come.
SaaS in its pure form…One copy of the code, used by all customers on shared servers. Pay by the month.Scale up, scale down as needed.
But not all SaaS is completely “Pure” SaaSThere are a number of different models that generally fall in the SaaS bucket. After all, you have to sell it in a form that makes sense for the target customers.
CAC – tells you if you are acquiring customers cost effectively and predictable or wasting money or still figuring it outExpected future Contribution impacts what kind of support costs you can sustain, should also have value to an acquirorGenerally expect to see some churn over time, but it needs to be managed closely. The best way to offset churn, besides reducing it, is to demonstrate expansion of upsell business with existing accounts.Clearly, there are many other metrics to look at, and depending on the business model, some others may also be key
While many folks initially thought ofSaaS to be just another way of delivering software, we know it is far more than that.SaaS affects implementation, support, upgrades, expansions and the entire business model.Do you get paid up front? Do you sign annual or monthly contracts? When do you recognize revenue?Is CMRR the key top line indicator?Who are the eventual strategic partners/acquirors for your business? Are they SaaS companies? What metrics do they report and track?
Ascent Venture Partners presents at MassTLC
MassTLC: Business Decisions andModels from the SaaS CFOAscent Venture Partners: Matt FatesJune 27, 2012
Ascent Venture Partners: Matt Fates Experience: Ascent Venture Partners 2002 – Present Norwest Venture Partners 1998 - 2000 Alex Brown & Sons 1996 – 1998 Areas of Focus: Data analytics, cloud business services, security Current Investments: Education: BA, Computer Science, Economics – Yale University MBA – Tuck School of Business at Dartmouth (Tuck Scholar)2
Ascent Venture Partners Who we are Investment team of six, dedicated to investing in IT innovation for the enterprise Supporting early-stage entrepreneurs At the forefront of enterprise tech investing We have backed more than 100 early-stage, emerging technology companies since 1985, generating more than $10 billion in enterprise value We leverage our extensive network to make connections for portfolio companies to investors, customers and advisors that can support their long- term success.3
SaaS Investments: Transforming Legacy Industries Cloud Scheduling for large & small enterprises Appointment CRM: Enable self-serve appointment scheduling for customers, employees and partners Cloud Print Service for large enterprises Store it in the cloud. Print it where needed, when needed, in any amount. Quality guaranteed. SaaS-based Service for business data Live data streamed directly into e-commerce and CRM applications SaaS-based Security for specialty markets Enables control of data while gaining the collaboration and cost savings benefits of the cloud
… And Then There’s SaaS Custom SaaS Built to the specific pricing and hosting needs of a company Subscription pricing Most commonly an annual or monthly subscription fee Subscription plus transactions A monthly or annual fee plus a fee per transaction7
Measuring SaaS Key SaaS metrics we monitor: Fully loaded cost of customer acquisition vs. contribution margin and expected duration Line up all costs associated with acquiring a customer against their contribution margin Consider time offset (length of sales cycle) How long to they stay customers on average? Expected future contribution from existing customer base Churn vs. Expansion/Upsell8
Impacts of SaaS Business Impacts of Using SaaS: Cash vs. revenue vs. bookings vs. CMRR When it comes time to sell the company most buyers don’t use SaaS metrics or accounting!9
Ascent Venture Partners: Matt Fates Thank You Ascent Venture Partners 255 State Street, 5th Floor Boston, MA 02109 (617) 720-9400 www.ascentvp.com @AscentVP10