The short answer is “as much as you need”. The more tactical answer is “as much as you can raise cheaply”. The latter is a pragmatic view. Raise more than you need when times are good. Just because you raise it does not mean you need to spend it – capital efficiency is always good!
In this post I look at what VC are saying SaaS ventures need to raise to get to scale and profitability. But I’ll also look at what VC are doing – what SaaS deals they are funding currently. I look at the capital efficiency drivers, what you can do to reduce your need for capital. And finally, I show you which VC are active in SaaS today.
What Are VC Saying?
The answer according to Bruce Cleveland of Interwest is about $40m.
Take that seriously. Cleveland is a SaaS specialist with serious operational experience who has done his research on this subject. But as he points out, the details matter. There are two points of caution:
- This is looking in the rear view mirror at ventures funded some time ago that did an IPO in 2007 or earlier. It is a different world today – less capital available and less need for capital.
- VC are happy with models that require a lot of capital. Capital is what they have to offer and if you need a lot they are in the driving seat.
Lets look at the operational details, the capital efficiency drivers, in a minute. First, lets see what VC are actually funding today.>>> READ MORE at: