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A Workshop on SMB SaaS Fundraising
Mar. 21, 2017
San Francisco, CA
2
Ta b l e o f C o n t e n t s
Introduction
SMB Fundraising Activity
How to raise your Round
01
07
14
Private & Confidential | 3
I n t r o d u c t i o n
M A R K M A C L E O D
F O U N D E R & P R E S I D E N T
S U R E PAT H C...
4
S u r e P a t h : O u r P u r p o s e
Helping you fund, grow and exit your company
The process of raising growth capital...
5
S u r e P a t h & S M B
•We have been part of some the most successful SMB SaaS companies
•We have deep relationships wi...
in its Series B financing from
served as the exclusive strategic and
financial advisor to
6
R e c e n t D e a l s *
in its...
SMB Fundraising Activity
8
S M B S a a S F u n d r a i s e s i n 2 0 1 6
$0.7 M
$2.2 M $8.4 M
$11.0 M
$22.6 M
$29.6 M
4
57
72
27
15
13
0
10
20
30
4...
9
I n v e s t m e n t s B y T y p e
The most funded segment in 2016 was marketing tech,
representing almost 1/4 of all dea...
10
B r e a k i n g D o w n t h e t o p t w o s e g m e n t s
Business management tools have expanded from
accounting softw...
11
I n d u s t r y S p e c i f i c S a a S C o m p a n i e s F u n d e d
2
1
2 2
7
8
3
2
3
0
2
4
6
8
Auto Construction Fin...
12
M o s t A c t i v e I n v e s t o r s i n S M B
1
2 3 4
5 6 7
8 9 1 0
5 of its 12 investments (42%) in
2016 are in SMB
...
IT/Infrastructure
HR Tech
Business Management
Marketing Tech
FinTech
FinTech
Business Management
Business Management
Marke...
How to Raise Your Round
Private & Confidential | 15
T h e F u n d r a i s i n g A l p h a b e t
Round Stage Size Revenue Growth Source Purpose
See...
Private & Confidential | 16
T h e T h r e e P s
Progress
aka
Traction
People Product
Seed: 1 of 3
A: 2 of 3
B: All 3
All s...
Fundraising Timeline: typically a 3 - 4 month process
ACTION ITEM RESP MONTH 1 MONTH 2 MONTH 3
Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk...
Private & Confidential | 18
S A A S K P I S
Churn
(Logo)
Churn
(Revenue)
Ltv/ Cac Payback Growth Channels
< 3%/
Month
< 1%...
Private & Confidential |
• Know what investors are looking for
• Get warm intros
• Control timing (parallel, not serial)
•...
Private & Confidential |
• Early vs. Growth Stage Fundraising
• Raising too much capital
• Raising from Strategics
• Using...
Shubham Datta
Director
shubham@surepathcapital.com
647.972.6834
Rena Wang
Analyst
rena@surepathcapital.com
416.897.8922
Ma...
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Workshop: How to get organized to raise funding (Mark MacLeod, SurePath Capital Partners)

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The Small Business Web Summit 2017 (San Francisco, CA).

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VIDEO: https://www.youtube.com/watch?v=zQYjhSyyPOY

Workshop: How to get organized to raise funding
by Mark MacLeod, Founder, SurePath Capital Partners

Published in: Business
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Workshop: How to get organized to raise funding (Mark MacLeod, SurePath Capital Partners)

  1. 1. A Workshop on SMB SaaS Fundraising Mar. 21, 2017 San Francisco, CA
  2. 2. 2 Ta b l e o f C o n t e n t s Introduction SMB Fundraising Activity How to raise your Round 01 07 14
  3. 3. Private & Confidential | 3 I n t r o d u c t i o n M A R K M A C L E O D F O U N D E R & P R E S I D E N T S U R E PAT H C A P I TA L PA R T N E R S Mark has over 14 years experience as a CFO for leading companies such as FreshBooks, Shopify, Tungle and many others. He also spent 3 years as a General Partner at Real Ventures, Canada’s largest and most active seed stage venture fund. He has raised hundreds of millions in capital from investors in Canada, the US and Asia. In addition, Mark has sold companies to Airbnb, Blackberry, Rackable Systems, Return Path and others.
  4. 4. 4 S u r e P a t h : O u r P u r p o s e Helping you fund, grow and exit your company The process of raising growth capital is very different from raising early stage capital It is cheaper than ever to start companies, but more expensive than ever to build market leaders. If that’s your aspiration, you will need growth capital We help you prepare for growth stage and help you raise the capital needed to become a market leader We have sat on both sides of the table. We have funded, grown and exited many companies We offer up that experience to help our clients prepare for funding and exits There are no other advisors focused on SMB software. We know all the most active SMB buyers. We work with you to facilitate the intros that pave the way to inbound interest If you decide to exit, we manage the process for you from start to finish SurePath maximizes your optionality: We make sure you know what it takes to build a market leader and help you fund that goal. We ensure you are always in the minds of strategic buyers so that if they decide to make a move in your space, you are in the conversation. You can then decide; Keep going or exit? Growth Funding Strategic Guidance Exits
  5. 5. 5 S u r e P a t h & S M B •We have been part of some the most successful SMB SaaS companies •We have deep relationships with SMB investors and buyers •SurePath is committed to becoming the leading strategic financial advisor to the global SMB software market
  6. 6. in its Series B financing from served as the exclusive strategic and financial advisor to 6 R e c e n t D e a l s * in its Series B financing from served as the exclusive strategic and financial advisor to in its Series A financing from served as the exclusive strategic and financial advisor to on its sale to served as the exclusive strategic and financial advisor to * Excluding deals that have closed but not yet announced
  7. 7. SMB Fundraising Activity
  8. 8. 8 S M B S a a S F u n d r a i s e s i n 2 0 1 6 $0.7 M $2.2 M $8.4 M $11.0 M $22.6 M $29.6 M 4 57 72 27 15 13 0 10 20 30 40 50 60 70 80 $0 M $5 M $10 M $15 M $20 M $25 M $30 M Angel Seed Series A Series B Series C Series D+ NumberofDeals AverageDealSize Deals and Average Deal Size Avg Deal Size Number of Deals * *46 companies either did not disclose stage of raise, or raised a bridge round $445.1M $599.0M $639.8M $307.8M 65 75 64 52 0 10 20 30 40 50 60 70 80 $0M $100M $200M $300M $400M $500M $600M $700M 2016 Q1 2016 Q2 2016 Q3 2016 Q4 NumberofDeals TotalCapitalRaised Deals By Quarter Total Capital Invested Deal Count 234 rounds for $1.95B in aggregate funding
  9. 9. 9 I n v e s t m e n t s B y T y p e The most funded segment in 2016 was marketing tech, representing almost 1/4 of all deals. This segment includes solutions such as CRM, marketing automation, SEO/SEM, and content management. The second most active segment was business management solutions. This includes back office tools and productivity software to allow SMBs to track and improve their performance. The data shows that companies serving the full stack of small business owners’ technology needs are being funded. SMB software is a large and growing market. AdTech 3% Business Management 20% FinTech 13% HR Tech 7%Industry Specific 7% IT/Infrastructure 19% Marketing Tech 21% Marketplace 3% Retail Tech 7% Investments by Total Funding
  10. 10. 10 B r e a k i n g D o w n t h e t o p t w o s e g m e n t s Business management tools have expanded from accounting software to more sophisticated business intelligence tools for SMBs. While the largest sub-segment funded is back-office SaaS. Productivity and business analytics are also growing sub-segments. CRM continues to be a hot area for funding in the SMB marketing tech space. Marketing analytics tools and content management solutions are quickly gaining speed, as more SMBs are looking for DIY solutions to control their digital marketing performance.
  11. 11. 11 I n d u s t r y S p e c i f i c S a a S C o m p a n i e s F u n d e d 2 1 2 2 7 8 3 2 3 0 2 4 6 8 Auto Construction Finance Healthcare Hospitality Legal Logistics Real Estate Other Industry Specific SaaS Solutions Vertical market solutions used to be reserved for large enterprises. However, we are now seeing them come down to the SMB market. 30 industry-specific SaaS vendors serving SMBs were funded in 2016.
  12. 12. 12 M o s t A c t i v e I n v e s t o r s i n S M B 1 2 3 4 5 6 7 8 9 1 0 5 of its 12 investments (42%) in 2016 are in SMB 4/10 Investments are in SMB 4/226 investments are in SMB4/108 investments are in SMB 4/8 investments are in SMB 4/54 investments are in SMB4/44 investments are in SMB 4/53 investments are in SMB 4/66 investments are in SMB 4/36 investments are in SMB
  13. 13. IT/Infrastructure HR Tech Business Management Marketing Tech FinTech FinTech Business Management Business Management Marketing Tech IT/Infrastructure 13 To p 1 0 S M B R o u n d s i n 2 0 1 6 $180M $90M $55M $50M $40M $96M $75M $50M $42M $35M
  14. 14. How to Raise Your Round
  15. 15. Private & Confidential | 15 T h e F u n d r a i s i n g A l p h a b e t Round Stage Size Revenue Growth Source Purpose Seed Idea - First Revenue < $3M $0+ N/A Angels, Seed Vcs Find P/M Fit A Test Channels, Accelerate Early Revenue $3M - $10M $1Mm Arr+ 2X+ Early Stage Vc Find Repeatable Growth Engine B+ Commerci alization $10M+ $7M Arr+ 2X+ Early + Late Vc Make More Sausages
  16. 16. Private & Confidential | 16 T h e T h r e e P s Progress aka Traction People Product Seed: 1 of 3 A: 2 of 3 B: All 3 All stages: Progress!
  17. 17. Fundraising Timeline: typically a 3 - 4 month process ACTION ITEM RESP MONTH 1 MONTH 2 MONTH 3 Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 6 Wk 7 Wk 8 Wk 9 Wk 10 Wk 11 Wk 12 PREP Kick off Meeting ALL Strategy session ALL Series B readiness Assessment SCP Review existing Financial Model SCP Review comps, trends, valuations, approach SCP Final ask ($) ALL Determine desired terms ALL DOCUMENTATION Investor Deck outline SCP Investor Deck COMPANY Financial Model ALL Intro deck COMPANY INVESTOR PIPELINE Prepare list SCP Qualify list SCP Intros SCP DATA ROOM Review existing materials SCP List of items to prepare SCP Set up & populate pre term sheet room ALL Set up & populate post term sheet room ALL ROADSHOW Dry runs ALL Pitch meetings COMPANY Review data room INVESTORS Diligence INVESTORS Term Sheets received ALL Decision COMPANY Signed term sheet COMPANY CLOSING Legal drafting COMPANY Disclosure schedules ALL Closing COMPANY SurePath Capital Partners Inc. ⋄ Private & Confidential
  18. 18. Private & Confidential | 18 S A A S K P I S Churn (Logo) Churn (Revenue) Ltv/ Cac Payback Growth Channels < 3%/ Month < 1%/ Month 3X+ < 12 Months 2X+ Not Just Direct
  19. 19. Private & Confidential | • Know what investors are looking for • Get warm intros • Control timing (parallel, not serial) • Look for forcing functions • Build momentum • Have great counsel • Solve for alignment & values over valuation 19 B e s t P r a c t i c e s
  20. 20. Private & Confidential | • Early vs. Growth Stage Fundraising • Raising too much capital • Raising from Strategics • Using Advisors • Do you want to exit? 20 O t h e r C o n s i d e r a t i o n s
  21. 21. Shubham Datta Director shubham@surepathcapital.com 647.972.6834 Rena Wang Analyst rena@surepathcapital.com 416.897.8922 Mark MacLeod Founder & President mark@surepathcapital.com 416.843.6004

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