Today, we’re talking about avoiding one time payments as a SaaS business.
Sometimes it may seem attractive to take a one time fee from a customer, usually for something like consulting or development services. Try to avoid this if you can. Instead, increase the price of the customer’s annual plan proportionately. You can still ask for all or some of the money upfront. I usually suggest asking for 3 months paid in advance.
But with this approach you’re increasing your recurring revenue, with a small hit to overall margins but most importantly: you get to start next year’s contract negotiations at a higher price point. You’ve already upsold them!
Today, we’re talking about announcing your round to raise more.
One of the best ways to generate new investor interest is to announce a previous round of funding. You’ll be amazed at how many investors, old and new, suddenly appear in your inbox, keen to learn more. Some will want to invest now to avoid missing the boat, others, usually later stage institutions, may want to connect before the “next” round.
Now if we’re announcing a previous round, then maybe we’ve had time since that last round closed for some additional, exciting growth and coincidentally, we just happen to be ready for the next round, right now.
Startup’s often put their founders in tough situations and one of the toughest is becoming a solo founder. Within the Sterling Road portfolio, a solo founder recently raised an $18M Series A led by Accel. Here are the 3 skills Joseph Quan, CEO of Knoetic, perfected to ensure 2021 was a successful year:
What: You’ll need a basic understanding of most tasks within the company from sales and hiring to engineering management and marketing. If you try to hire people for these tasks too early, it’s hard to know what “good” looks like, as you haven’t completed them yourself. …
Today, we’re talking about resilience and execution.
4 years ago I invested in a company called Twine, that last year they spun out as a new company called Knoetic. And Knoetic announced a big funding round this week to much fanfare.
But most of it has been hard for that team. In recent years, they went through it all:
By any reasonable measure, they should have packed up and taken a job at Google. …
Today, we’re talking about using compliance to close sales.
Everybody hates dealing with compliance, it’s a huge hassle. However, I often see it as a deciding factor for enterprises when choosing a vendor. They may want the latest, trending software discussed online but unless it’s compliant with their regulations, they cannot buy.
Now, this creates an opening for your startup. If you’re willing to do the hard work of being compliant for SOC 2, HIPAA or others, then you can massively improve your chances of closing an enterprise sale, as well as creating a barrier to entry for competitors.
Today, we’re talking about the common excuses given by founders for not raising prices.
1. The team is worried this will hurt our metrics and jeopardize the next round. While it’s true raising prices may mean less customers, it also means more revenue and revenue is the best metric for an investor, by far.
2. Customers will be offended. This is false. Customers do not get so offended by a price that they cut off communications, instead, they’re more likely to reveal their real budget.
3. We need a feature to launch first. The reality is that customers probably don’t care too much about anything but the core feature — they just want to quickly solve their problem and move on.
Today, we’re talking about initial pricing for startups. In my opinion, it’s a lot easier to start as a premium service.
1. If you’re charging more, you give yourself room to make mistakes without it costing you more than you’ve received from the customer and reducing your runway.
2. Building great software is tough, when you’re still a very small team. It’s a lot easier to provide a wonderful, concierge service, because you don’t have a lot of customers.
3. No need for broad distribution. As premium customers pay more, you need less of them, which then means you can spend less money on marketing.
Today, we’re talking about where to fundraise.
For founders outside the main tech hubs, it’s tempting to fundraise in the places that you know. While that may work for your first few checks, you really should try to meet investors in the main tech hubs like SF, NYC, LA, Austin etc.
The high concentration of investors and startups in those places, creates competition which drives up prices, gives you choice on who to take money from and helps you close your round faster so you can go back to building.
It may seem daunting to break into a region without an existing network connection but quality, personalized cold emails and persistence will generate results.
Today, we’re talking about getting investor help on hiring. As professional networkers, your investors are a great resource for recruiting but you do have to put in a little effort to get the results. Asking if they “Know any good engineers?” will not yield a lot of candidates. Instead, here’s some things you can ask for that will be effective:
1. First, ask for 3 specific names for an open role with a near term deadline. This forces the investor to search their contacts and help you ASAP or say no to a treasured portfolio company. …