The Official SaaStr Podcast: SaaS | Founders | Investors

SaaStr 685: Why Investors Love SaaS with SaaStr CEO Jason Lemkin and QED Partner Amias Gerety on Fintech Beat

Sep 2, 2023

SaaS founder Jason Lemkin and QED Partner Amias Gerety discuss the appeal of SaaS to investors, the rise of SaaS as a valued business model, the cyclical nature of FinTech and its risks, challenges of running a lending business, and the importance of proper controls in startups.

34:58

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Episode guests

Amias Gerety

Jason Lemkin

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

SaaS companies' high gross margins and ability to generate cash flow have made them attractive to investors.

Investors often mistakenly apply SaaS metrics to Fintech companies, leading to inflated valuations and potential fraud issues.

Deep dives

The Growth of SaaS Companies

SaaS, or Software as a Service, has become a popular business model in the tech industry. While consumer-facing tech stocks like Facebook and Amazon dominate the public market, venture capital is driven by the success of SaaS companies. These companies, such as Splunk and Salesforce, provide software over the cloud and generate recurring revenue. Initially viewed with skepticism, SaaS models have proven to be successful, with high logo retention and net revenue retention rates being key factors. The SaaS model's high gross margins and ability to generate cash flow have made it attractive to investors.

Introduction

3min

The Rise of SaaS and Investor Love

10min

The Cyclical Nature of FinTech, Costs, Risks, and the Prevalence of Fraud

3min

Challenges of Running a Lending Business and Importance of Proper Controls

17min

Concluding Remarks and Sponsor Ads

2min

SaaStr Founder and CEO Jason Lemkin and Partner at QED Investors Amias Gerety chat on the Fintech Beat podstream about all things SaaS, money, and what makes a great founder.

Some topics covered include:

What makes SaaS so great
How SaaS is fairing in the “macro” economy
Perspectives on fintech and SaaS and how they overlap
How an investor chooses what to invest in and when it’s time to walk away

Fintech Beat is all about the intersection of finance, tech, and policy, and now they’re touring outside the neighborhood of fintech and into the great big world of SaaS.

While the world of public tech stocks is defined by consumer-facing juggernauts like Facebook, Amazon, and Google, the world of venture capital is defined by the North Star of SaaS.

Let’s dive right in.

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