Survival Tactics for SaaS Startups
Year over year the number of enterprise SaaS companies joining the unicorn club continues to grow. And with that exciting notion in the minds of many of our entrepreneurs, Andrea’s first piece of advice generates a buzz of excitement right off the bat.
1. Go out and find US VCs
Having just returned from a roadshow in Silicon Valley, Andrea had fundraising top of mind and was strong in asserting her observations — US VC’s are interested in Canada and they are investing in Canadian companies even more so than Canadian firms. To further demonstrate this, Andrea noted that in 2015 134 US VC’s invested in Canadian companies (versus 116 Canadian VC firms) and possibly the most promising stat; 40% of these investments were made in software.
2. Demonstrate the Path to Initial Traction
When you’re preparing to fundraise VC’s need to see that you have earned initial traction. Here are a few of Andrea’s key findings:
- Easy beats better — make sure your product is easy to use.
- Know your first customers — talk to them & service around their needs — this is critical.
- Get customer face time — don’t rely on automated ‘feedback’ tools to talk with your customers.
- In the early days having an advocate is important — leverage them as ‘referenceable customers’
- In Silicon Valley they all buy from each other — leverage your community for validation from fellow business leaders.
- Revenue is the end game — the whole team should be wholly focused on sales as a group effort.
- Inside sales — bring in this team when you have proven repeatability. You must have a process for repeatable sales first.
- Make customer success management a priority — this will provide insight into your product roadmap.
3. Be Mentally Prepared for the Long Haul
SaaS and Enterprise SaaS are a long haul, according to Andrea. She notes that it will typically take seven to 10 years for a SaaS company to come into full bloom.
This requires a long runway and a healthy amount of capital, however founders should expect to be bootstrapping for the first 18–24 months while the team finds the right product market fit. If $100million ARR is the goal, be mentally prepared for this to take 24 months.
In 2014 Slack went from $0 — $100million ARR … but they were founded in 2009. It takes 3 years in SaaS to become an “overnight success” so as a founder, hold on to your story and be mentally prepared with staying power.
Editor’s Note: This post was originally published in July 2015