SaaS, Tech and Business

10 expensive lessons from the startup world

In my experience as an investor, entrepreneur and startup advisor I have learned a number of lessons. They are fully aligned with the advice you get from startup and VC gurus, but at least for me, it takes a bit of pain in my wallet and my pride for the lessons to really sink in. I hope I can make it slightly cheaper and less painful for others, or even to prevent them from making at least one or two mistakes.


Startups are a wonderfully invigorating experience. I have been a full-time operator in two, have advised extensively five, have invested in over 10, and have seen countless examples. I find startups incredibly inspiring as a professional experience and startup people a lot of fun and learning to be around. You get to do almost everything in each function, you are creating something from scratch so you can move fast, without bureaucracy. You are inventing so you need to creatively design an experience for a customer. It is really a great package that is a lot of fun.

At the same time startups usually imply a significant short-term opportunity cost as most of the equivalent compensation is equity. And they can be very stressful, there is never enough time to do everything, and you experience a very quick succession of highs and lows. With the highs being very high, but the lows being really low.

In the last years, I have read a lot of stuff about startups. When I did my first one in the internet boom there was almost nothing, not even the term or the glamour. Now, you have great textbooks on how to do things and what pitfalls to avoid. Still, making a startup work is really difficult as a lot of moving parts have to fit and work out.

I have distilled the top 10 mistakes I have made myself or seen made. Nothing new but even if it helps just one person avoid a mistake well worth the time writing. They are mostly relevant to B2B tech plays, especially SaaS, which is what I am familiar with, but they probably translate to other domains too.

  1. Tech is king. A tech startup has tech in the name for a reason. It depends heavily on digital technology and as such tech talent is the key competitive advantage it has. Forget about the glitzy business plan, the domain expert, and the ex-consultant. Tech founders and tech talent are priority number one. Tech talent will determine your speed to iterate and your value for a potential exit. Tech giants like Facebook mainly buy and look for engineers, the rest is overhead.
  2. Pain-killer. Of course, many startups with outstanding tech founders fail. For the most part, this is because they build things no one wants or just “vitamins” that will make life better but are not absolutely necessary. Startups need to offer pain-killers for a big bleeding wound that someone has. Alternatively, they need to pander to one of the seven deadly sins as Linked In founder has famously said. If people don’t scream for your product you probably are onto a “nice-to-have”. That is going to take too long to sell to survive, even with people telling you that they should be using it.
  3. CEO Sales leadership. The CEO is, among many other things, the salesperson-in-chief and evangelist of the company. A CEO that doesn’t go out to sell will have trouble finding traction. This is especially difficult for technical founders that sometimes are not used to sell and communicate. Of course, selling only means in-person selling for some products, but the CEO will always need to be close to the customers to listen to what they really need. A CEO that isn’t always selling their product (in their own unique way) is a big red flag.
  4. Customer personas and budget. This is very much B2B, you need to know whom you are selling to and the budget line item you want to be part of. It might take time to discover, but it is inescapable. Only people with budgets buy products, and people have job titles and worries that come with them. Even if you are selling to a small business owner that determines budget autonomously you will have to fit in some of her mental categories.
  5. Long-term commitment and passion. The stories you hear about startups in newspapers are about quick fame and riches. The stories you hear from entrepreneurs are about 7 to 10 years of hard work and overcoming disappointment. Your only chance to slog through those hard years with a steadily increasing opportunity cost is if you are really passionate about your goal. So take this as an at minimum 5-year (realistically 7+) decision and make sure you are so passionate about the topic that you will be happy even saying “at least we tried” at the end.
  6. Founder alignment and culture creation. Being co-founders is like a marriage, but seeing each other all the time and having grown-up kids that you have to motivate to work for much less than they could be making someplace else. You need to be totally aligned from the start and keep that alignment over time. Don’t paper over disagreements rather tackle them head on, get your prenuptial agreement (aka shareholders agreement), and make sure you agree on which culture you want to build.
  7. Anti-goldilocks talent. Talent in startups is tough. You have infinite work so you would want the best talent, however, you always have insufficient money so you always want the cheapest talent. As the CEO of Blackline said in the last SaaStr you have to choose two of cheap, talented and not crazy, and you can’t afford anything but cheap and talented. The consistent advice I have heard is to go towards three extreme profiles: (1) a few absolute stars that have done it before, as they will drive incredible impact and leverage on others even if they are expensive, (2) many cheap, enthusiastic and hopefully talented very young talent that hasn’t much experience but wants to learn, and (3) talented people who are quirky enough that they find it difficult to work in large corporations. Avoid someone that is reasonably cheap, talented and sane, you want to go to the extremes, goldilocks talent is better for corporates.
  8. Funding. You need money for everything. Even if the amount is much less than ten years ago you won’t able to build the product, sell to customers or deliver them the promise without money. If you are short on money you will spend all your time worrying about it and solving the problems it causes. Of course, funding doesn’t mean VC funding. You can have customers fund your startup and bootstrap it successfully even if it takes a bit longer. Just avoid being unrealistic about being able to do stuff without money, or hoping that a round of funding will materialize from thin air. Money is your gas and you will get nowhere with your tank empty.
  9. Data and analytics. Product, Technology and Sales have been the traditional pillars of startup success. Now Data is claiming its place in the table. Analytics will allow you to create much better product much faster and to sell a lot more much more profitably. Who is your analytics founder? You need one, so get it from the start.
  10. Family sport. On a more personal level, you can’t get into this alone. Your family and your friends have to be your support group. You won’t be able to talk or think about anything else, you will work 24×7 (even if you can do it from home), you will only be making money at the end of the rainbow, you will have at least a couple of horrible downs per month, odds are against you. Have you told your loved ones what they are getting into? Have they bought the ticket? You’ll need your loved ones to get you through the bad times and support you in your probable failure so make sure they have your back.

This doesn’t intend to discourage anyone. The list of obstacles is long, but the fun and professional and personal growth for trying is amazing, even if you don’t get the pot of gold. Just be aware of what it requires to have a chance and what sacrifices you will have to make. Newspapers, LinkedIn, Twitter and business books only talk about the exceptionally good cases because that is what people like to see. You will experience the full distribution of potential outcomes and need to be ok with them, even if the end you manage to get to the pot of gold through hard work, talent and luck.


Spain: The New SaaS Frontier?

(En español aquí)

spain saas

As Marc Andreesen famously said: “Software is eating the world”. This applies fully to business, where software processes are doing the eating. A software process embodies the digital paradox, faster, better, cheaper, instead of the typical cost-speed-quality trade-off. So software processes are the way of the future, winning irreversibly over analog ones.. Software as a Services (SaaS) companies make software processes for businesses, either horizontal (e.g. for the sales process) or vertical (e.g. Veeva for the life sciences world). They have already been spectacularly successful, creating a 400 billion industry and moving all the big enterprise software players (Oracle, SAP, Microsoft, Adobe) to SaaS.

From an economic viewpoint creating a large SaaS sector in a country makes sense. SaaS is an industry with relatively large employment base, and also a high qualification one. Salesforce has over 26.000 employees, Oracle over 130.000 and SAP over 80.000. They also generate a vibrant ecosystem of integration partners that also create large high value job bases. This compares with much less employment created from consumer internet startups, the most famous being Whatsapp with its less than 100 employees at its time of purchase for 20 billion. SaaS also boosts the productivity of businesses in a given country by softwarizing their processes. So investing to create a SaaS sector in Spain could make sense, especially as we enjoy some comparative advantages.

Spain’s advantages

Creating a SaaS product requires a three legged-stool: product, technology and sales. Product represents the business knowledge of what is the process and what pain that business feels. Technology requires experienced developers and managers to create. Sales puts the product in the hands of the thousands of businesses that can profit from it, and then makes sure they derive full advantage from it. In Spain we have the makings to create a vibrant SaaS ecosystem. We have comparative advantages in terms of the three legs of the stool.

In terms of product, we have a lot of business executives with relevant experience but limited opportunity. The Spanish labor market if very rigid and Spanish large companies are shedding jobs and limiting opportunity. The most entrepreneurial employees are facing either the shedding, because they are younger and cheaper to let go, or the lack of opportunity, because older employees keep top management roles limiting advancement prospects. This creates a steady stream of available entrepreneurial individuals with the requisite domain knowledge.

In terms of technology Spain has great and cheap coding talent. Spanish coders are top contributors to open source efforts and figure greatly in technical online courses. A large supply and limited demand creates relatively cheap programming talent. Spain also has great lifestyle in a secure European setting, this allows companies to attract foreign development talent to Spain easily.

Finally, in terms of sales, Spain has a very tough market. Spanish companies are penny pinching and tend towards do it yourself. So they are a tough market to sell effectively to. This means that proving a product in the Spanish market will force you to create a winning value proposition and have your marketing, sales and customer success up to snuff. It is not a great market, but it is a very good testing ground. If you make it here you can be sure that you will make it elsewhere.

Challenges to overcome

Of course, the ecosystem still needs further development. Even if we have the ingredients we have a lot of work to do yet. We are missing people with experience in SaaS, our developers tend to be more about quick hacking than at scale software engineering and we lack sales and customer success talent with SaaS experience.

First, we are just getting the first generation of SaaS enterprises to mature. This means that there is still very little people in Spain with the experience of building a SaaS company. Fortunately, the first generation is maturing and we can expect them to help new SaaS entrepreneurs as mentors and angels. On top of that, there is plenty of great material on SaaS available, people like Jason Lemkin through SaaStr, David Skok in For Entrepreneurs and Tomasz Tunguz in his blog have an MBA worth of material on how SaaS should work. No substitute for real world experience but a good complement. We need to put this knowledge in the hands of all SaaS entrepreneurs in Spain so they don’t have to repeat the mistakes that are already well known.

Second, technical people in Spain are great coders but need to improve their software engineering prowess. Coding will take you to a prototype but it requires a real software engineering pipeline with design, development, qa, deployment, operations and architecture to build something that scales. Initiatives such as Ironhack take Spanish great development talent to modern software engineering levels. There is also plenty of training available nearly for free, whether global like Udacity, or Spanish like Tutellus. More Ironhack, Tutellus and experienced technologists will help Spanish awesome native talent to move to software engineering.

Finally, the most difficult gap to close is the sales, marketing and customer success gap. In Spain we have great professionals in large enterprises running effectively huge sales, marketing and customer support staffs. However, they tend to be totally disconnected from the startup world and be schooled in the traditional ways to run these functions. SaaS experience will help, the staff in the Spanish branches of Salesforce, Oracle, SAP and many others will also provide a fertile ground. We might need the equivalent of Ironhack for Sales, Marketing and Customer success to take the talent pool to the next level and create the new rooster of practitioners.

Español, SaaS

España: ¿La siguiente frontera del SaaS?

spain saasComo dijo Marc Andreesen: “El software se está comiendo el mundo”. Esto se aplica plenamente a las empresas, donde los procesos software están dando los mordiscos. Un proceso de software encarna la paradoja digital, más rápido, mejor, más barato, en lugar de la típica elección entre coste-velocidad-calidad. Por ello, los procesos de software son el camino del futuro, y ganaran irreversiblemente sobre los analógicos. Las empresas de software como servicio (SaaS) crean procesos de software para las empresas, ya sean horizontales (por ejemplo, para el proceso de ventas) o verticales (por ejemplo, Veeva para el mundo de las farmaceúticas). Ya han tenido un éxito espectacular, creando una industria de 400 billones de dólares y moviendo a todos los grandes jugadores de software corporativos (Oracle, SAP, Microsoft, Adobe) a SaaS.

Desde un punto de vista económico crear un sector SaaS grande en un país tiene sentido. SaaS es una industria con base de empleo relativamente grande, y también una cualificación alta. Salesforce tiene más de 26.000 empleados, Oracle más de 130.000 y SAP más de 80.000. También generan un ecosistema vibrante de socios de integración que también crean grandes bases de trabajo de alto valor. Mucho más que el empleo de las empresas de Internet de consumo, el más famoso caso es Whatsapp con sus menos de 100 empleados en su momento de compra por 20 billones. SaaS también aumenta la productividad de las empresas en un país dado mediante la softwarización de sus procesos. Así que invertir para crear un sector SaaS en España podría tener sentido, sobre todo porque disfrutamos de algunas ventajas comparativas.

Las ventajas de España

La creación de un producto SaaS requiere tres patas: producto, tecnología y ventas. El producto representa el conocimiento del negocio, de cuál es el proceso y qué dolor se experimenta. La tecnología requiere que desarrolladores e ingenieros de software experimentados la desarrollen. Las ventas ponen el producto en las manos de los miles de empresas que pueden beneficiarse de él, y luego se asegura de que obtengan la ventaja completa de ella. En España tenemos los ingredientes para crear un ecosistema SaaS vibrante. Tenemos ventajas comparativas en términos de las tres patas.

En términos de producto, tenemos un montón de ejecutivos de negocios con experiencia relevante, pero oportunidad limitada. El mercado laboral español es muy rígido y las grandes empresas españolas están eliminando puestos de trabajo y limitando las oportunidades. Los empleados más emprendedores se enfrentan a las salidas, porque son más jóvenes y más baratos de sacar, o a la falta de oportunidad, porque los empleados con más antiguedad se mantienen en los puestos directivos más altos. Esto crea un flujo constante de individuos empresariales disponibles con el conocimiento de dominio requerido.

En términos de tecnología España tiene talento de desarrollo abundante y barato. Los desarrolladores españoles son grandes contribuidores a los esfuerzos de código abierto y figuran en los cursos técnicos online. Una gran oferta y una demanda limitada crea un talento de programación relativamente barato. España también tiene una gran calidad de vida en un entorno europeo seguro, esto permite a las empresas atraer talento extranjero de desarrollo a España fácilmente.

Por último, en términos de ventas, España tiene un mercado muy difícil. Las empresas españolas son muy austeras y tienden a la autoprestación. Así que son un mercado difícil para vender. Esto significa que probar un producto en el mercado español obliga a crear una propuesta de valor ganadora y tener marketing, ventas y gestión de clientes muy ajustado. No es un gran mercado, pero es un campo de pruebas muy bueno. Si se tiene éxito en España el resto va a ser fácil.

Necesidades en España

Por supuesto, el ecosistema todavía necesita un mayor desarrollo. Incluso teniendo los ingredientes tenemos mucho trabajo por hacer. Nos faltan personas con experiencia en SaaS, nuestros desarrolladores tienden más a las soluciones rápidas que a la ingeniería de software aescala y nos falta talento de ventas y gestión de clientes con la experiencia SaaS.

En primer lugar, estamos en la primera generación de empresas SaaS. Esto significa que todavía hay muy poca gente en España con la experiencia de construir una empresa SaaS. Afortunadamente, la primera generación está madurando y podemos esperar que ayuden a los nuevos empresarios SaaS como mentores y ángeles. Además de eso, hay mucho material sobre SaaS disponible, personas como Jason Lemkin a través de SaaStr, David Skok en For Entrepreneurs y Tomasz Tunguz en su blog tienen un MBA de material sobre cómo una empresa SaaS debería funcionar. No es sustituto para la experiencia real, pero es un buen complemento. Tenemos que poner este conocimiento en manos de todos los empresarios SaaS en España para que no tengan que repetir los errores que ya son bien conocidos.

En segundo lugar, los técnicos en España son codificadores muy buenos, pero necesitan mejorar sus habilidades de ingeniería de software. La codificación crea a un prototipo, pero requiere un pipeline de ingeniería de software real con diseño, desarrollo, qa, despliegue, operaciones y arquitectura para construir algo que escale. Iniciativas como Ironhack llevan el talento de desarrollo español a los niveles modernos de ingeniería de software. También hay un montón de formación disponible casi gratis, ya sea global como Udacity, o español como Tutellus. Más Ironhack, más Tutellus y más tecnólogos experimentados ayudarán al talento nativo español a pasar a la ingeniería de software.

Por último, la brecha más difícil de cerrar es la brecha de ventas, marketing y gestión de cliente. En España contamos con grandes profesionales en grandes empresas que gestionan enormes fuerzas de ventas, marketing y soporte al cliente. Sin embargo, tienden a estar totalmente desconectados del mundo de las startups y conocer las formas tradicionales de ejecutar estas funciones. La experiencia SaaS ayudará, el personal de las filiales españolas de Salesforce, Oracle, SAP y muchos otros también proporcionará un terreno fértil. Podríamos necesitar el equivalente de Ironhack para ventas, marketing y gestión de clientes para llevar el grupo de talento al siguiente nivel y crear la nueva generación de profesionales.


SaaS Startups in Spain

Updated 15/6. Thanks everyone who spotted who was missing

At a first glance, just taking into account the portfolios of the largest venture capitals, there are more than 50 post seed SaaS startups in Spain. This might seem like a lot, but the ecosystem is still very young compared to other markets. There are also a limited number of exits and many of the startups are not Spain-based. At the same time, the last months have shown increasingly positive results and are creating a cadre of executives that know how to make SaaS work. Given the depth of technical talent and of enterprises in Spain we can expect a bright future for SaaS.


The only large 100M€+ exit has been Olapic‘s sale to Monotype. Olapic is a visual commerce and marketing SaaS focused on earned content. It was created by three Spaniards in New York, so it doesn’t belong to the Spanish ecosystem even if its founders do. According to a recent interview with one of the founders, they are now looking to invest in SaaS startups in Spain. A boon to the ecosystem.

Fizzback was a Nauta-backed UK-based SaaS company offering Voice of Customer solutions. It was acquired by NICE systems for approximately 80 million USD. Again, not a true Spanish ecosystem exit, but at least a Spanish fund involved.

Reviewpro is an Active Venture Partner-backed SaaS solution focused on social reputation for hotels. It was sold in early 2017 to Shiji for 33 million euro.

Other SaaS sales in Spain have been undisclosed but probably smaller. was sold to Michelin after significant capital investment by Seaya. Although it could be classified as a marketplace, its core offering is a SaaS product for restaurants. Upplication, a mobile app builder for SME SaaS, was recently sold to Mobusi. Ducksboard,  an analytics SaaS company invested by Cabiedes, was sold to New Relic, one of the leaders in IT SaaS, for equity that is worth several tens of millions today. Lucierna was an Application Performance Management company with an A round by Inveready that was sold to Smartbear which was recently acquired by Francisco Partners, one of the world’s largest technology focused Private Equities funds. 3scale was an API management platform with a seed investment of Inveready that was sold to Redhat. iJento is a SaaS Analytics company based in the US and invested by Nauta, that was acquired by Blenheim Chalcot, a UK venture builder. nLocal was part of Plenumedia, a Seaya investment, and was sold to Grupo Publicar for more than 10 million euros.

Rounds B and Cs

Only six SaaS startups that are or were based in Spain have got close or surpassed the 10 MM USD mark:

  • Userzoom is a user experience optimization SaaS startup that has received a 34 million USD investment round from TC Growth Partners after the first investment by AVP. With the round it also moved its headquarters to Silicon Valley.
  • Zyncro is a social business SaaS that was sold to Desarrolladora Parana to further develop it for 30MM USD. Zyncro had Cabiedes and AVP investments.
  • Carto is a location analytics SaaS platform that has raised more than  30MM USD. It now has offices in New York and Madrid. Carto had an initial investment by Kibo and Vitamina K (the previous incarnation of K Fund).
  • OpenBravo provides open source business management solutions and had a 12MM USD round with Adara nearly 10 years ago.
  • Anfix is an accounting solution for SMBs that has raised nearly 10 million USD with private investors
  • Packlink is a shipping SaaS with more than 20 million USD in funding with investors like Active Venture Partners and Accel

Another five SaaS businesses have had rounds in the tens of millions and have Spanish investors and/or some Spanish team members although they are based outside of Spain

  • Brandwatch is a social media listening SaaS for corporates that has raised two growth rounds, a 22 and a 33 MM USD round with Highland and Partech. It has always been based in the UK, and had an initial investment by Nauta.
  • Basekit is a website builder based on London and invested by Nauta
  • Redbooth makes project management SaaS. It was created in Barcelona, accelerated by Seedrocket. It is now based in Redwood City after several investment rounds in the US. Redbooth was invested by Kibo and JME.
  • Jetlore is a content personalization SaaS. Again, based in the US even if invested by Kibo and having some Spanish management
  • Visure is an requirements engineering SaaS based in the US invested for an undisclosed ammount by Bullnet and other investors.

Rounds A and large seeds

There are another 28 SaaS companies in Spain (or with Spanish presence and founders in the case of Miora) that have had large seed or A rounds. Taken it based on the VC that has invested they are distributed in the following one:

Three each by:

  • Sabadell Captio another expense management SaaS (shared with Bankinter and Kibo), Trappit a travel expense optimization solution and Billage an SME focused CRM.
  • K-Fund (and its previous encarnation Vitamina K) shares Billin with Kibo, has invested in Beonprice (pricing SaaS for hotels) and has Ludei, an IT SaaS company by Eneko Knorr
  • JME Caravelo , a travel expense optimization solution, Sentisis, a social listening SaaS, and Dexma , a electric utility SaaS platform, with Inveready

Two each by:

  •  Seaya, one SME focused SaaS platform based in Mexico but with Spain presence and CEO (Miora) and another is Plenummedia.
  • JME Caravelo , a travel expense optimization solution, and Dexma , a electric utility SaaS platform, with Inveready
  • Bankinter has Captio with Sabadell and Kibo, and Mailtrack with Caixa
  • Kibo shares Captio with Sabadell and Bankinter, and has Billin, a fast growing SME electronic billing company, with K-Fund

Finally one each by:

  • Bullnet has Codice Software, another IT-related SaaS
  • AVP has Whisbi, a conversational commerce SaaS to improve website conversion through multichannel
  • Adara has Kompyte a competitive intelligence SaaS to analyze in real time competitor digital marketing
  • Axon with Sentisis a social listening software, together with JME

I am sure there are at least a hundred SaaS preseed and small seed startups. I know many of them and they are looking good. So be prepared for a lot more SaaS activity in Spanish startups

Please let me know any other relevant SaaS companies which are missing from the list. I am sure there are at least a handful




Stages of a SaaS Venture

The stages of a SaaS Venture seem to be pretty standard if you listen to most SaaS Experts (e.g. David Skok, Jason Lemkin and David Skok in the Saastr Podcast) and talk to SaaS executives. Interestingly enough it is not so much what you do in the stages that is important, but rather what you don’t do.

Stage 1 – Finding product market fit.

Typical funding situation: pre-seed or seed.

Goal: Find product-market fit with your software, build something that you client persona will want to take you out of your hands at a decent margin

What you do.

  • Talk and listen to your customers to understand what they need and what they are willing to pay for. This should give you your product definition and customer persona
  • Develop your product as simply as possible, be willing to take shortcuts until you know what clients want. Minimum Viable Product is your motto.
  • Make your initial sales. These sales should be founder-lead but should go beyond the people you know
  • Ensure the product generates value and stickiness with your customers once developed. Your product is not just the software. Product = Software + Customer Success.

What you don’t do.

  • You don’t try to sell at scale or expand internationally.
  • You shouldn’t be optimizing customer acquisition metrics or sales channels.
  • You shouldn’t try to get the pricing right (yet).
  • You shouldn’t be hiring like crazy.

What signs show that you are ready to move to the next phase

  • You have a relatively stable and clear product your customers love and get value from
  • You know who is your customer persona, competitive set and value proposition
  • You can sell to your customer persona consistently with high success rates

Key metrics

  • MRR (target >50k)
  • Close rate of customer persona opportunities (target >50%)
  • Gross margin (>50%)


Stage 2 – Creating a repeatable sales and marketing model with good unit economics.

Typical funding situation: seed or round A.

Goal: Develop a consistent sales and marketing methodology through which someone other than the founder can sell your product consistently, at an attractive price and have a customer success process that allows you to keep your clients and upsell them.

What you do.

  • Optimize your sales and marketing methodology to reduce CAC and improve pricing and margin
  • Improve your Customer Success process to optimize your LTV and Net Retention
  • Create standard sales, marketing and customer success process that can be executed consistently with a defined set of tools.
  • Develop a hiring and onboarding machine

What you don’t do.

  • Scale your sales and marketing rapidly or go international
  • Totally redefine the product or create a new product category
  • You shouldn’t be hiring like crazy.

What signs show that you are ready to move to the next phase

  • You can bring on regular sales and marketing people to sell consistently at your desired CAC to LTV ratio
  • You have a high net retention and are able to scale the customer success team to serve new customers
  • You are able to consistently source qualified sales, marketing and customer success talent

Key metrics

  • CAC to LTV ratio (target >3)
  • Gross margin (target >70%)
  • Net Retention (target >110%)


Stage 3 – Growing to global dominance

Typical funding situation: round B and beyond.

Goal: Pour gasoline into a well-oiled machine to convert it to increasingly high ARR without losing what has made the company great

What you do.

  • Strengthen the culture and processes to ensure the company can survive hypergrowth
  • Build a management layer to be able to withstand growth
  • Hire, hire, hire and fire quick

What you don’t do.

  • Be conservative with cash as if you where in Stage 1 or 2
  • Hire B players or keep them because you spend too much time hiring
  • Sacrifice unit economics to growth
  • Stop adapting your product to client needs

What signs show that you are ready to move to the next phase

  • You are able to grow consistently without deteriorating unit economics or culture
  • You are the 800 pound gorilla in your category
  • You find adjacent markets you can colonize

Key metrics

  • ARR growth > 50%
  • LTV to CAC >3
  • Net retention > 110%
  • Gross profit >70%



SaaS Investors for Spanish Startups

Updated 14/06/2017.

SaaS Startups are a very special type of startups. An analysis of the ~400 startups that have been invested by the top VCs in Spain show only ~10% could be considered SaaS. While eCommerce, Marketplaces and Social Networks startups are much more prevalent.

Because of this, the type of investors that look and understand SaaS startups with their complex sales cycles and metrics are only a subset of the overall investment community.

I have put together a preliminary list of who to look for in terms of funding for SaaS startups that will be updated as I come across new interesting investors. It only covers institutional investors, there are many angels investing in SaaS, here we focus on VCs.

Spain. We start with the funds that invest in SaaS in Spain, it is categorized based on the number of their investments that are SaaS and the knowledge they put out that is SaaS related:

  • Nauta is the “SaaS Champion” in Spain. With 11 SaaS investments at ~1/3 of its portfolio SaaS related, it looks like a good bet for anything SaaS.
  • AVC has made 8 SaaS investments and is also the king of exits, with Reviewpro, Userzoom and Zyncro under its belt.
  • Adara, Sabadell, JME and Bankinter have less SaaS investments (3-6 each) but they keep a large percentage of SaaS focused (~1/3) so they should understand it well.
  • Seaya and Kibo have 3 each although with a lower percentage over their overall portfolio (10-20%). However, they each have an interesting reason to consider them. Seaya’s focus on marketplaces is very complementary with SME SaaS, as marketplaces can turn into SaaS as or Miora show.
  • K-Fund has recently made 3 SaaS investments and it is putting out the best SaaS content by far on its blog.
  • Inveready has a fund focused mainly on SaaS from its different vehicles. So even though it has a wide variety in its portfolio it has some of its partner
  • Caixa has a substantial number of SaaS investments but given the very broad nature of their portfolio it is a small percentage.
  • The successful founders of Olapic, Luis Sanz, Jose del Cabo and Pau Sanabria have put together a fund to invest in SaaS founders like themselves.

Europe. There are some SaaS focused VCs in Europe:

  • Point Nine Capital. Based in Berlin they invest in SaaS throughout Europe. They already have some winners in their portfolio like Zendesk. They start investing in the “pre-A” round and then move through the whole growth of the company.
  • 83 North. Based in London and Tel Aviv. 83 North takes advantage of the Israel-Europe connection and has nearly 20 companies in its portfolio.
  • Notion Capital. Based in London, more than 20 SaaS focused companies in their portfolio. They invest in Seed and Round A
  • Atomico. While Atomico goes beyond SaaS it does have some SaaS focused partners like Teddie Wardi
  • Surepath Partners. Based in London it is not a fund, but rather a financial advisor focused on the sector.
  • Other SaaS focused funds are Partech (e.g. Brandwatch), Paua Ventures (e.g. Pipedrive) , Project A Ventures and RTA Ventures (e.g. Typeform and Point Nine Capital)

USA. There are SaaS focused VCs in the US. Given SaaS is typically relatively easy to globalize they should be considered. First, because they can really bring large sums to bear and secondly because they can offer great knowledge. The usual suspects are:

  • Bessemer. With close to 400 companies in its portfolio it has its share of SaaS startups (e.g. Shopify, Eloqua). It also has the laws of SaaS to its credit.
  • Red Point. Home to Tomasz Tunguz, one of the foremost knowledge creators in SaaS. It has more than 40 SaaS companies in its portfolio with some great ones like Twilio, Zendesk, Zuora, Looker, Concur and Heroku
  • Index. More than 50 SaaS companies with some great ones like Hortonworks, Dropbox, Slack, Zendesk and Trello.
  • Insight. 40 SaaS investments including Zenefits, Exact Target, New Relic, Shopify and Qualtrics.
  • Scale. With more than 25 SaaS investments including Box, Docusign and Hubspot
  • Matrix. With more than 30 SaaS investments including Hubspot and Zendesk, and the one an only David Skok of Forentrepreneurs.
  • Accel. At 125 SaaS companies in its portfolio, Accel is second only to Salesforce Ventures in number. It has many SaaS success stories like Slack, Qlik, Dropbox or Atlassian. Philippe Boteri takes care of Europe
  • SaaStr Fund. Even if it is small by US size (80 million) and does 4-5 investments a year. SaaStr Fund is Jasom Lemkin’s fund, and Jason Lemkin is one of the preeminent voices on SaaS startups.

Corporate. Corporate VCs are also an important in the SaaS world as there are some SaaS giants. They can give you money, strategic positioning and even an exit:

  • Salesforce. Salesforce Ventures is the grand daddy of all corporate venture funds focused on SaaS with more than 150 companies invested, all SaaS focused
  • Workday. Workday Ventures has a much smaller program than Salesforce, it focuses mainly on machine learning. Spanish companies are lucky enough that Ignacio Vilela is part of the team.