E33: Valuations, Investing, and Market Dynamics with SaaStr's Jason Lemkin
Nov 27, 2023
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Jason Lemkin, Investor & Founder Chairman at SaaStr, discusses investing, valuations, and challenges in the SaaS industry. Topics include power laws in investing, challenges in SaaS companies, market dynamics, and board relationships for founders.
The composition and management of a board should be carefully handled to avoid challenges faced by nonprofit managing for-profit entities.
Founders should regularly seek feedback from board members to understand investor perspectives and improve future fundraising efforts.
Investors now seek guarantees of eight to ten times return on their investment, putting pressure on founders to demonstrate a clear path to generating substantial returns.
Deep dives
Board dynamics and governance in the OpenAI situation
The OpenAI situation highlights the complexities of board dynamics and governance, with a nonprofit managing a for-profit entity. The composition and management of the board, including bringing in new members, could have been better handled in retrospect.
The importance of asking for feedback and potential funding
Founders should regularly ask for feedback from their board members, inquiring about their performance and whether they would consider investing further if needed. This proactive approach helps in understanding the investor's perspective and can provide insights for future fundraising efforts.
The changing landscape of growth rounds and fundraising
The current market conditions have impacted growth rounds, with investors now seeking guarantees of eight to ten times return on their investment. This puts additional pressure on founders to demonstrate a clear path to generating substantial returns for the investors.
The challenges of upcoming IPOs and fallen unicorns
Companies that are heading towards an IPO will need to navigate the challenges of valuations, while there is a long line of well-performing companies waiting to go public. Fallen unicorns, on the other hand, face the challenge of survival if they are not growing and are running out of funds.
The importance of building better software
There is a need for better software development and delivery to address the current challenges in the SaaS industry. Many companies rely on customer success teams to patch the shortcomings of their software, and there is a necessity to improve the quality and functionality of SaaS applications.
Jason Lemkin, Investor & Founder Chairman at SaaStr joins the show to discuss investing, valuations, interest rates, and the challenges faced by the SaaS industry heading into 2024. Want more TOPLINE? Read the recaps.
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