Tom Tunguz

JUNE 23, 2024

We gathered data on the US venture-backed software companies that went public between 2010 & today. What does it take to go public? Has it changed over the last 15 years? We corrected the trailing 12 months’ revenue at the time of IPO for inflation & plotted the data.

Revenue 244

Revenue Finance Trends Startup 244

Tom Tunguz

JUNE 17, 2022

Series A has dropped from 30% to 20%; Series B from 22.5% to 12%; and Series C from 18% to 11%. Across financing rounds, dilution from capital has fallen by 30-50% in that decade. Cumulative Dilution Points. Here’s a table of cumulative dilution points for a hypothetical startup raising 4 rounds in one year.

Finance 321

Finance Startup 321

SaaStr

SEPTEMBER 15, 2023

Big Bet #1: Cast Your Net Wide — Bet On Inbound While Going Global Freshworks was founded in October 2010 in Chennai, India. Big Bet #2: Find Tomorrow’s Great Anglers — Hire Talent With A Learning Mindset In 2010 and 2011, San Francisco was the place for SaaS talent. It helped them get funding in the first round.

Sales Hiring 228

Sales Hiring Scale SMB AI 228

SaaStr

NOVEMBER 7, 2024

Additionally, if you look at the mobile shift, the iPhone was released in 2007 but we didn’t get our first mobile apps like Uber and Snapchat until 2009 and 2010. It wasn’t until years later that Workday and Salesforce and a whole generation of SaaS companies came along to build on top of that infrastructure.

AI 191

AI Artificial Intelligence ChatGPT Mobile 191

Tom Tunguz

MARCH 11, 2020

The market bounced back to similar levels once in Q2 2010, but needed eight quarters to return to its previous volumes. The Series B market had a nice resurgence as well, followed by a retrenchment in late 2010 and then another surge. That grew to about $5B per quarter in 2007 and early 2008. in the quarters following the crash.

Marketing 318

Marketing Startup Investment Trends 318

Tom Tunguz

APRIL 1, 2019

In 2010, one venture dollar bought $1.24 If we look at the ROIC across IPOs across the last 12 years or so, we see that same initial dynamic of incredibly efficient companies in the 2010 and 2014 IPO cohorts. It’s tripled from about $92m to more than $300M since 2010. One venture dollar bought forty-two cents at IPO.

Startup 271

Startup Software Review SaaS Acquisition 271

SaaStr

JANUARY 25, 2023

It’s 2010 customers have grown their ACV … a stunning 24x over the following 12+ years. Others are seeing this as well, although some, like MongoDB, aren’t. But many in SaaS are seeing tougher times in Europe than North America. ServiceNow’s growth has slowed there: And a few interesting learnings: #6.

Azure 249

Azure Cloud Enterprise Payment Features 249

SaaStr

JANUARY 24, 2024

Founded back in 2010, it had steady growth to $100m ARR, IPO’d quietly in 2019, then has grown 30%+ annually every year since. So sometimes steady and even is the right path. SproutSocial is one of those. That’s compounded to $360m in ARR today, and a market cap of $3.4 Billion, so about 9x ARR.

Social Media 213

Social Media SMB Enterprise Scaling 213

Tom Tunguz

OCTOBER 7, 2019

The top left chart shows a $1M round had about 41% market share in 2010; that grew to about 54% in 2014; now it has fallen to 35%. But is now at the same level it was in 2010. In 2010, it was very likely that a business raised a $1M round before raising a $3-5M dollar round. The $3M round has suffered a similar loss of share.

Marketing 202

Marketing Benchmarks Trends Startup 202

SaaStr

JUNE 2, 2022

in May 2009 … but then returned to normal 2% by 2010: #4. Customers kept buying more SaaS than ever, which masked all-time high churn in SMB accounts. SMBs just plain went out of business in ’08-’09. So our gross SMB churn spiked to a crazy high of 5.5%

SMB 297

SMB SaaS Churn Enterprise 297

Tom Tunguz

APRIL 18, 2022

Circa 2010, there was only one full-time analyst at the company working on data, and his laptop was effectively the company’s data warehouse. Oh, Revenue_new is the old column. The company moved to customer_revenue last quarter when we hired a new VP of Finance and they updated the definition. Airbnb faced this problem, too.

Revenue 310

Revenue Sales Hiring Finance Metrics 310

Tom Tunguz

AUGUST 6, 2023

Then GreenDot’s IPO in Q2 2010 at $1.4b Companies chewed gravel, gritting out each quarter. About 5 quarters later, the exit market offered a little sprig of hope. In Q4 2009, Amazon acquired Zappos for $1b. suggested the IPO market wasn’t icy. at $1.5b.

Venture Capital 175

Venture Capital Acquisition Investment Marketing 175

Clouded Judgement

OCTOBER 20, 2023

For context on a 10Y at 5% - from 2010 to 2020 the 10Y averaged roughly ~2.5%. Said another way, the 10Y today is double what it averaged from 2010 to 2020. In general economic data has continued to come in strong (a data point suggesting inflation could stay sticky, and the economy can absorb rates staying higher for longer).

Cloud 164

Cloud Azure AWS Software Review 164

SaaStr

MAY 22, 2023

The best of us kept growing , albeit with elevated churn through 2010: What Really Happened to SaaS in the ’08-’09 Recession And to those of us who have been doing SaaS a long time … 2023 just feels Like it Used to Be. SaaS markets had fully recovered later that year. Back when you needed CFO approval on a bigger deal.

SaaS 240

SaaS Churn Sales Software 240

Tom Tunguz

JANUARY 7, 2020

Since 2010, the number of round by quarter has followed a periodic growth, with consistent seasonality. Mean round sizes have increased from 5 million in 2010 to 17.5 I wondered if Softbank's changes in investment strategy had much to do with it, but as the chart shows, they were not a meaningful contributor.

Marketing 229

Marketing Finance Investment Trends 229

Clouded Judgement

JANUARY 13, 2023

As a reminder - from 2010 - 2020 the average 10Y rate was ~2.3%. That was more broadly a period of ZIRP, and it’s interesting that today the 10Y isn’t hugely different from where it was in the period of 2010 - 2020 Morgan Stanley CIO Survey Everyone is eagerly awaiting 2023 forecasts to be “de-risked.”

Cloud 130

Cloud Forecasting Subscription Payment Features 130

Tom Tunguz

NOVEMBER 19, 2020

And it would be 4x the size of 2010. Let’s go through these one by one using the Pitchbook Venture Monitor Report. VCs have raised $57b through Q3, implying $75b for the year, a total which would eclipse any other year in the last decade. The late stage venture market is on pace to set a record in 2020.

Venture Capital 352

Venture Capital Government Pricing Investment 352

SaaStr

JANUARY 11, 2024

He was also awarded the 2010 Salesperson of the Year at the MIT Sales Conference. Prior to these roles, Mark was the founding CRO at HubSpot, where he scaled annualized revenue from $0 to $100 million and expanded his team from 1 to 450 employees. Mark was ranked #19 in Forbes’ Top 30 Social Sellers in the World.

Technical Review 269

Technical Review Scale Management Sales Hiring 269

Tom Tunguz

JANUARY 26, 2017

In 2010, classic SaaS was booming, the benefits of a subscription model were finally becoming clear to the public markets and the mass-market. The chart above breaks out 14 different software categories and shows the amount of dollars invested in each category indexed to 2010 levels.

Startup 208

Startup Software Machine Learning Artificial Intelligence 208

Tom Tunguz

FEBRUARY 6, 2022

Venture investing clocked more than $329b invested last year , up 10x since 2010. The rapid halving of software multiples has disjointed the valuations between public and private companies, and between growth and value companies.

Investment 251

Investment Pricing Business Model Enterprise 251

SaaStr

NOVEMBER 25, 2021

2010: Ease-of-Use. By 2010, we were finally started to get to basic feature parity. If you haven’t localized an app before, and didn’t architect it that way from the beginning, it’s a big project. We won Google, Facebook, Twitter, and so many other deals just with this feature. Phew, a long time!

Scale 195

Scale Mobile Branding Engineering 195

Clouded Judgement

OCTOBER 21, 2022

And to get ahead of some questions, the long term average I’m using is from 2010-2020 (so excluding the crazy multiples of Covid). The average 10Y in the period of 2010 - 2020 was ~2.3%. I don’t think it goes back to ZIRP, but I think it looks closer to the average from 2010 - 2020 than what it does today.

Cloud 130

Cloud Software Review Subscription Payment Features 130

SaaStr

JUNE 24, 2021

SproutSocial was founded in 2010. It’s not your valuation today that matters. It’s where you can grow into, in SaaS. Also a reminder that power laws are everywhere in SaaS. Nine years layer, it was worth $815m — impressive. But then 2 years after that, they are worth $4.7B. Keep going in SaaS. Value compounds.

Social Media 272

Social Media SMB Cloud Scale 272

IT World

APRIL 11, 2023

The annual survey of 39,000 employers across 41 countries showed a 2% year-over-year increase in employers who said they’re struggling to fill roles; that’s more than double the difficulty reported in 2010 (31% of employers at that time).

Marketing 124

Marketing 124

Clouded Judgement

SEPTEMBER 29, 2023

As a reminder - the average software multiple from 2010-2020 was ~7.8x, and the average 10Y over that same period was ~2.3%. What’s been most surprising to me is how resilient software valuations have been in the face of pretty massive moves in rates. The current median multiple is ~5.7x. So what’s going on?

Cloud 187

Cloud Government Banking Software Review 187

Tom Tunguz

MAY 24, 2020

And it indeed has contracted by about 30% per year since 2010, while M&A has tripled. And this persists for all the reasons that have made Silicon Valley special: the open networks, the universities, the culture, the concentration of capital. You might counter the startup IPO market is dead, long live the IPO market.

Venture Capital 263

Venture Capital Entrepreneurship Startup Acquisition 263

SaaStr

JULY 22, 2023

.” — Brian Halligan, co-founder and chairman of HubSpot “Secondary” liquidity for SaaS founders has been part of the VC toolkit for funding later stage SaaS founders since at least 2010-2011 or so. I got a significant offer as we approached $10m ARR back in the day at Adobe Sign / EchoSign — and I should have taken it.

Scale 184

Scale Pricing Acquisition Scaling 184

Clouded Judgement

JUNE 16, 2023

Said another way, the median NTM revenue multiple is ~23% below it’s historical average, but forward growth expectations are the lowest ever (~40% below historical average), and the 10Y is ~40% higher than it’s historical average (from the period 2010-2020). Median NTM Growth Rate was ~25% Median 10Y was ~2.3%

Cloud 130

Cloud Software Revenue Subscription 130

Tom Tunguz

FEBRUARY 21, 2021

Appearing suddenly in 2010, it promptly disappeared - confoundingly abruptly and surprisingly unexpectedly - in 2015 - albeit, justly in my view. ” As a SaaS investor, these businesses aren’t in my bailiwick, but since.gg suffix certainly is in yours. polyptoton). killing Hemingway softly).

Startup 264

Startup Business AI Trends 264

IT World

OCTOBER 4, 2021

Ever since Apple introduced its mobile device management (MDM) protocol for managing devices in 2010, the iPhone has been the de facto standard in smartphones for businesses across every industry.

Enterprise 137

Enterprise compliance Mobile Management 137

IT World

DECEMBER 13, 2021

It's tough to even remember now, but in the earliest incarnation of Chrome OS , way back in the Paleolithic era of 2010, Chromebooks didn't have a Files app. In the beginning, Chromebooks weren't really meant to manage files.

Wireless 140

Wireless Management Data 140

Clouded Judgement

SEPTEMBER 27, 2024

Microsoft launched Azure in 2010, and Google launched GCP to the public in 2011 (they launched a preview of Google App Engine in 2008, but made it publicly available in 2011). Subscribe now Foundation Models Are to AI what S3 was to the Public Cloud Many people look at 2006 as the birth of the public cloud - the year Amazon launched AWS.

Cloud 173

Cloud GCP(Google Cloud Platform) AWS Azure 173

Clouded Judgement

FEBRUARY 24, 2023

So today, the median multiple is ~25% lower than where it’s longer term average (pre 2010 we don’t have much data on cloud software multiples as there weren’t many public cloud software companies). It makes sense the median multiple today is lower than the 2010-2020 average given the difference in rates.

Cloud 130

Cloud Subscription Payment Features Revenue 130

Andreessen Horowitz

FEBRUARY 22, 2022

In 2010, global ecommerce sales were $572 billion. In 2020, it was $4.2 trillion , and it’s expected to grow by $11 trillion between 2021 and 2025 – accelerated by the pandemic, which drove many businesses online even in … The post Investing in Alloy Automation appeared first on Andreessen Horowitz.

Investment 112

Investment Sales Business Enterprise 112

SaaStr

JULY 11, 2024

Two Case Studies Scale Ventures invested in Box in 2010 while in the high-growth, low-burn bucket. In the later-stage venture market today, companies are rapidly trying to get to that gray box by lowering their spend, even though growth might take a hit. It means they’ll survive and maybe have a chance to move back up to the green box again.

Scale 236

Scale Scaling Churn Investment 236

Tom Tunguz

MARCH 10, 2019

2018 observed the fewest number of angel-led financing rounds since before 2010. Angel investing was an important part of the Startupland ecosystem. Today, you can’t make the same argument. Angels led 156 rounds last year, a figure that collapsed from 714 in 2015.

Finance 279

Finance Investment Trends Startup 279

Tom Tunguz

FEBRUARY 26, 2018

The chart above depicts the total disclosed value of US venture-backed SaaS startups which have been acquired by PE firms since 2010. The median venture-backed SaaS acquisition by PE has increased to $250M, up from $50M in 2010. Private equity hasn’t been a common exit route for venture backed startups in the past.

Startup 173

Startup SaaS Acquisition Pricing 173