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User Acquisition:the low-cost strategies every advertiser should know

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As the name suggests, user acquisition is the process of acquiring new users for any online venture, either it’s a game, application, or some online service. If we talk specifically about mobile game marketing, user acquisition (UA) is the strategy to get more installs. This can be done via paid advertising or any other organic means; the goal is to market the game to get new users.

According to the reports by SocialPeta – one of the best advertising intelligence tools, user acquisition is a continual process. Why do we say so? Let’s take the example of Clash of Three Kingdoms, a game that falls in a very competitive niche but is still maintaining its position at the top of SocialPeta’s advertising impression chart. We can say that user acquisition is continual hard work from the marketing team.

We can see that the company Heyshell HK Limited (the publisher of Clash of three kingdoms) is continually investing since 2014 to acquire new users. That’s the reason they have generated a massive success with the number of impressions as high as 246 million. 

Are you thinking of acquiring new users for your mobile application or game as well? Let’s have a look at some of the strategies!

The Most common user acquisition strategies for a mobile game:

Define your target audience:

Defining your target audience is one of the essential things that you can do for your mobile game. You need to specify who will be interested in your game and target only those people to optimize your marketing budget. Don’t be afraid to narrow down your audience and to take inspiration from your past advertising campaigns or the campaigns of other people. You can find the detailed target audiences of your niche using tools like SocialPeta. It’ll also be great if you test your audience using a small budget before launching a proper campaign.

Use the Right Acquisition Channel:

It would be best to find the right user acquisition channel according to the marketing budget and your audience’s presence. You can assess your competitors for this; all you need is to find what they are doing and replicate the process with some creativity. Alternatively, you can try testing with a small budget on different channels and select the one that gives more return on investment (ROI).

Create High-Quality advertising video:

An adequately produced advertising video can do wonders. You can either use gameplay capture as an ad creative or create some other creative video to engage your audience. The purpose is to make them install the game.

Pay attention to ASO:

Who doesn’t like free downloads for their mobile game? App store optimization is an excellent way of user acquisition without spending money on advertisements. Before diving into ASO, you first need to analyze your keywords and the competition level for those keywords. It’s better to find and use as many low competition keywords as you can for your mobile game because it will help in easier ranking.

Each of the above-mentioned user acquisition methods needs a cost control check if you want a good ROI. Let’s talk about the importance of cost control in acquiring users to control the cost of our advertising campaigns.

The importance of cost control for mobile game user acquisition marketing:

A good game design is a basis for user acquisition. A visually appealing game can make the users install the game and get addicted to it, so it’s better to develop quality graphics for your mobile game. Let’s take some words of advice from popular companies. Based in Brisbane, Australia, Spunge Games was founded in 2014 and initially began developing casual titles before moving on to hyper-casual. The studio has released seven games and has amassed an estimated 80 million downloads worldwide.

A game needs a lot of quality tests before being listed on the market places for users. Here is what Fludder said about testing.

How many quick tests can I do? How quickly can I do them? I need to do 100 to make a good game.” 

This seems hectic? But this is the truth! A game must pass through these quality tests in order to be launched in such a competitive market. Game development companies are looking for cost-effective techniques to develop, test, and market the games. 

SocialPeta, which has a massive advertising database and technical capabilities, knows the current plight and anxiety of the enterprise and quickly responds to upgrade its cost intelligence function in a short period of time. With millions of ad creatives and other ad data, SocialPeta is undoubtedly an all in one solution for building a user acquisition strategy for mobile games.

Voodoo case: How Scribble Rider gain great success from Cost Intelligence

Speaking of the importance of cost control, Let’s take the example of the Tapped Studio from the UK, run by two brothers. They developed the hyper-casual game Scribble Rider that was published by Voodoo. The game got massive success in as few as 45 days. It successfully dominated the United States iOS game ranking and made its place in the top positions.

The team also proved that the casual game could hit the sky with a proper strategy and interactive development even though the team is small and the budget is low. All it needs is a good understanding of cost intelligence.

The gameplay of Scribble Rider did not come up from the beginning but was verified by the CTR test and then improved step by step until the CTR reached 10%.

Using SocialPeta’s Creative Search & Analysis function, we have found the following ad creative, which shows a Million impressions on Facebook. We can see that there is no visual interference, allowing users to focus on what is happening. The ad creative also helps in a quick understanding of gameplay. This is the key point for them to reach 10% CTR.

You might be thinking that how can you know if your game has the potential to generate such a high CTR? Worry not! SocialPeta can answer this question. SocialPeta can help you analyze global average CTR in the different game genres and advertising channels.

You can also refer to this average to estimate your CPI. We know that when the CTR reaches 5%, the game has a 45% probability of getting a score of fewer than 20 cents in the subsequent CPI test. Of course, this is a rough probability. Moreover, in addition to analyzing the CTR

average, SocialPeta also supports analyzing the key index of cost intelligence such as CPC, CPA, and CPI. The cost analysis of specified audience interests is also available.

Global Cost Intelligence Analysis – Advertising Costs on Facebook

Besides the key index of cost intelligence, there are a few interesting questions that are always present — especially when launching a new game — and are not easy to answer if you are responsible for user Acquisition budgets:

  • What is the average indicator of market cost?
  • How to adjust the advertising cost strategy?
  • What is the change in trends in the advertising costs?

To answer the above questions, let’s take a look at SocialPeta’s latest released report: Mobile Games 2020 Insights into Global Media Buy and Creative Advertising. We made the following excerpts about the advertising cost analysis of the Facebook channel in last quarter:

CPC had been relatively stable and showed a gradual rise since late November, then peaked at $0.97 on Dec. 27th.

CTR did not change much in October and November, remaining at around 1%, but there was a sharp increase on November 30th, and the figure peaked at 2.21%, rose 120% in a week.

CPM showed an upward tendency from the middle of November, peaking at $10.8 by the end of 2020.

More about SocialPeta’s Cost Intelligence

In SocialPeta‘s powerful AdCost Analysis, you can select the advertising channel, category, placement, call to action, operating system, date range, and country to find out the best estimation for the CPC, CPM, and CTR. Demographics data is also available. Moreover, advanced filtering is available to filter your results and find the best cost according to your query.

Thus, we can say that SocialPeta is the ultimate solution for your user acquisition marketing. It can help find the target audience, the keywords, ad creatives, demographics, cost, and what not! 

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SaaS and Digital Commerce Subscription Service Chargebee Secures $125M via Series G Co-led by Sapphire Ventures, Tiger Global

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Chargebee, a subscription billing and revenue management platform, revealed on Tuesday (April 20, 2021) that it has closed a fresh round of $125 million in series G funding.

Chargebee‘s round was co-led by new investor Sapphire Ventures and existing investors Tiger Global and Insight Venture Partners, along with contributions from existing investor, Steadview Capital.

The firm’s latest investment round will help it with expanding its global presence and “further add to its partnership network,” according to a release. Chargebee is now valued at $1.4 billion, which “triples its valuation in less than 6 months,” the announcement noted.

As stated in the release, Chargebee has an “extensive” client portfolio which includes brands such as Okta, Freshworks, Calendly, Study.com, and many other “high-growth” subscription businesses.

As noted in the release:

“As a core revenue enabler for thousands of subscription businesses, Chargebee’s rapid growth has further been spurred by its fastest time-to-value and its long-term investment in customer growth. Chargebee’s platform is easy to implement; onboarding can be completed in less than ten days – even for large global enterprises.”

Paul Kapsner, Director of Finance at Superfoods company and a long term customer of Chargebee, said that today, they are able to introduce a new pricing experiment in 30 minutes and can also “converge on the right pricing point that suits our customer segments.”

Kapsner added that Chargebee has given them the “freedom” to “make mistakes, and then fix them right away.”

The COVID-19 outbreak has accelerated the shift towards digital platforms and services like SaaS and subscription-based business models “from cars to coffee providers,” the release noted while adding that the overall demand for “moving into a recurring revenue stream is expected to grow at a 17.5% CAGR over the next five years.”

The company recently “brought out enterprise-class capabilities like usage-based billing and a dedicated data center for Europe while getting consistently ranked #1 by customers among all Finance Products in review sites such as G2,” the announcement revealed.

Krish Subramanian, Co-founder and CEO at Chargebee, stated:

“Businesses today need to quickly respond to evolving customer needs, compliance requirements, and market pressures in real-time. More than ever before, businesses need their subscription revenue platform to be the reliable system of record that enables them to rapidly scale their revenue processes. Chargebee is committed to spearheading this movement towards a subscription-first world by helping our customers realize rapid value, and being an integral partner in their long-term growth journey.”

Rajeev Dham, Partner at Sapphire Ventures and the latest board member of Chargebee, remarked:

“We are thrilled to partner with Krish, Raman and the entire Chargebee team as we believe they have built a leading product in the subscription billing and revenue management space. As the global shift to subscription-first models continue to grow in popularity, Chargebee has an incredibly bold vision for new products for multiple market segments. After years of knowing them, I’ve been most impressed by their thoughtfulness and execution in building Chargebee as the emerging category leader that is reinventing the broader space.”

Chargeebee has a client portfolio that includes brands such as Freshworks, Calendly, Study.com, and various other subscription businesses focused on SaaS, D2C Ecommerce, OTT Streaming, E-learning, Publishing, and others, in more than 60 different countries, “selling to end customers across the world.”

As mentioned in the release, “with this fresh round of investments, Chargebee plans to further invest in their product to help businesses scale their subscription revenue operations seamlessly from startup to IPO.” The company also “announced that it will be increasing its investment on its global expansion, and key partnerships,” release noted.

As Chargebee continues to expand its operations, it’s also “beginning to reflect in the size of their flagship summit, Champions of Change.” The virtual summit aims to doube in size since the previous event was held in October of last year, with participation expected from 6,000 industry professionals.

As noted in the release, scheduled to take place on May 19 and 20, 2021 the Champions of Change summit “brings together leaders and rising change-makers in the subscription space to a common platform.”

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Source: https://www.crowdfundinsider.com/2021/04/174448-saas-and-digital-commerce-subscription-service-chargebee-secures-125m-via-series-g-co-led-by-sapphire-ventures-tiger-global/

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As UiPath closes above its final private valuation, CFO Ashim Gupta discusses his company’s path to market

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After an upward revision, UiPath priced its IPO last night at $56 per share, a few dollars above its raised target range. The above-range price meant that the unicorn put more capital into its books through its public offering.

For a company in a market as competitive as robotic process automation (RPA), the funds are welcome. In fact, RPA has been top of mind for startups and established companies alike over the last year or so. In that time frame, enterprise stalwarts like SAP, Microsoft, IBM and ServiceNow have been buying smaller RPA startups and building their own, all in an effort to muscle into an increasingly lucrative market.

In June 2019, Gartner reported that RPA was the fastest-growing area in enterprise software, and while the growth has slowed down since, the sector is still attracting attention. UIPath, which Gartner found was the market leader, has been riding that wave, and today’s capital influx should help the company maintain its market position.

It’s worth noting that when the company had its last private funding round in February, it brought home $750 million at an impressive valuation of $35 billion. But as TechCrunch noted over the course of its pivot to the public markets, that round valued the company above its final IPO price. As a result, this week’s $56-per-share public offer wound up being something of a modest down-round IPO to UiPath’s final private valuation.

Then, a broader set of public traders got hold of its stock and bid its shares higher. The former unicorn’s shares closed their first day’s trading at precisely $69, above the per-share price at which the company closed its final private round.

So despite a somewhat circuitous route, UiPath closed its first day as a public company worth more than it was in its Series F round — when it sold 12,043,202 shares sold at $62.27576 apiece, per SEC filings. More simply, UiPath closed today worth more per-share than it was in February.

How you might value the company, whether you prefer a simple or fully-diluted share count, is somewhat immaterial at this juncture. UiPath had a good day.

While it’s hard to know what the company might do with the proceeds, chances are it will continue to try to expand its platform beyond pure RPA, which could become market-limited over time as companies look at other, more modern approaches to automation. By adding additional automation capabilities — organically or via acquisitions — the company can begin covering broader parts of its market.

TechCrunch spoke with UiPath CFO Ashim Gupta today, curious about the company’s choice of a traditional IPO, its general avoidance of adjusted metrics in its SEC filings, and the IPO market’s current temperature. The final question was on our minds, as some companies have pulled their public listings in the wake of a market described as “challenging”.

Why did UiPath not direct list after its huge February raise?

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Source: https://techcrunch.com/2021/04/21/as-uipath-closes-above-its-final-private-valuation-cfo-ashim-gupta-discusses-his-companys-path-to-market/

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How to Run Effective eBay Ads

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How to Run Effective eBay Ads

You want to get your products in front of the people who are going to buy them. When you get your products on eBay, you’re putting them in front of an audience of 185 million people, but with competition from over 1.7 billion listings, how can you make sure you stand out from the crowd?

One way to ensure you’re getting your products in front of the right audience is to make use of eBay ads. These are extremely easy to set up and can help propel you to the top of the search results, even in the most competitive categories.

How Do eBay Ads Work?

eBay ads can boost the visibility of your products by allowing them to feature at the top of the listings. With millions of products on the platform, eBay is a competitive place, and if you’re competing against hundreds of sellers all selling the same product, it can be difficult to stand out.

This is where eBay ads come in, allowing you to pay for your listing to feature at the top of the search results.

Example of eBay ads - promoted listing

In this sense, it’s a lot like advertising on Google. You set up your ads, and your product can be featured higher in the search results, based on the quality and relevance of your listing and how much you bid.

One interesting difference with eBay’s main ad option, promoted listings, is you only pay if your ad is successful. Unlike many platforms where you pay every time your ad is clicked, with eBay, you only pay for your promoted listing if it results in a sale within 30 days of someone clicking the listing.

This allows sellers to get a clear picture of their return on investment (ROI) and is a big benefit of selling on eBay.

3 Types of eBay Ads

eBay offers a few different types of ads to suit your business needs.

Promoted Listings

Promoted listings are used by over 940,000 sellers and are the most common way of advertising on eBay. They’re an excellent way to get your product listing to the top of the search results.

To be eligible for promoted listings, you must:

  • be in good standing (meeting eBay’s terms and conditions)
  • have “above standard” or “top-rated” seller rating
  • have recent sales activity

One of the most important aspects of selling products online is getting people to view your listings, and this ad type is a great way to gain access to eBay’s 185 million active users. By featuring at the top of the search results, you will bring more people to your product page, and then it’s up to you to optimize your product page to make the sale.

eBay offers great analytics to help you get the most out of your advertising, and the nice part is you only pay for your promoted listings once you’ve sold an item.

Display Ads

eBay now runs display ads across its network, giving you another way to reach your target audience. Similar to the display ads you can run on Google Ads, eBay’s display ads allow you to target users with interests in certain categories to drive more traffic to your listing:

  • business, office, and industrial
  • cars, motorcycles, and vehicles
  • clothes, shoes, and accessories
  • computers, tablets, and networking
  • garden and patio
  • health and beauty
  • home furniture and DIY

This expands your advertising options, meaning you’re not just limited to reaching people through the search function.

eBay ads - example of display ad

Display ads aren’t available through the seller hub; instead, you can speak directly to eBay about this option.

Classified Ads

Classified ads are a good option for people who want to take advantage of eBay’s reach but sell a product that isn’t necessarily suited to selling on the platform.

These ads are available in several categories:

  • business, office, and industrial: $9.95 for a 30-day listing
  • specialty services: $9.95 for a 30-day listing
  • travel: $9.95 for a 30-day listing
  • real estate: $150 for a 30-day listing

Your ad is shown, the user clicks on it, and then eBay puts you in contact with the buyer to negotiate the sale outside of the platform. This means you’re paying only for the ad, not the fees for selling on eBay, but it also means you don’t get any of the protections you get as an eBay seller.

eBay Advertising for Large Brands

eBay also offers a more bespoke advertising service for large brands.

This option offers big advertisers branding solutions to help optimize their product pages and acquire in-depth insights into customer motivations to help brands get the most out of the platform.

This option might offer great benefits, but it requires a big commitment to advertising spend to be accepted. If you’re a large brand looking to make eBay advertising an essential part of your marketing, then it’s worth reaching out to the eBay team and exploring the option further.

How to Set Up Your eBay Ad Campaign

Setting up eBay ads is quick and simple. In just five steps, you can create promoted listings and boost your product’s visibility at the top of the search results.

1. Log in to Your Seller Hub

Your seller hub is where all your product listings live, and this is where you can create your eBay ad campaigns. Go to https://www.ebay.com/sh/, select “Marketing,” then “Promoted Listings” from the sidebar.

ebay ads - setting up promoted listings

2. Click “Create Your First Campaign”

If you’re new to promoted listings, you’ll be brought to a landing page that explains what they are and how they work. Click “Create Your First Campaign” to get started.

3. Choose How to List Your Promotions

You have three different ways to list your promotions:

  • Simple listing selection: This allows you to promote your products individually, making good use of eBay’s smart recommendations.
  • Bulk listing selection: This option is for people who want to promote lots of products with consistent stock and low turnover rates.
  • Creating rules: Rules allow you to automatically promote current and future products. This option works well for sellers with dynamic inventory and high turnover rates.
eBay ads - creating your promoted listings

4. Apply Your Ad Rate

This is where you choose how much you wish to pay for your eBay ads. Represented as a percentage of the total sale value, you’ll notice that eBay gives you a recommended ad rate for your product.

These are normally a good place to start, but if you want to change it, you can use the slider to set it to anywhere between 1-100 percent of your sale’s value.

5. Review and Launch

Lastly, you need to name your campaign and review the details. You can also set a date for the campaign to begin and end. Once you’re happy with everything, click “Launch.”

Tips for Creating Effective eBay Ads

As with any form of advertising, it’s important to have a good return on ad spend (ROAS), and the way to achieve this is through optimization. It doesn’t matter how many people your ad reaches if you’re not using the right keywords or your listing is of poor quality. There are several elements you need to get right.

Use Relevant Keywords

Choosing the right keywords to reach your target audience is extremely important. People don’t always search in the ways you expect they might, so you need to understand your audience and do your keyword research.

As with Google Ads, it’s important to match user intent with your ads, which means getting the right keywords in your titles, descriptions, and throughout your product listings. Slight differences in your keywords can make a big difference in the success of your ads, so make sure you’re optimizing to meet the demands of your target audience.

While it’s important to make sure you’re using the right keywords, it’s also important to remember not to keyword stuff. eBay’s algorithms are smart, and they understand when you’re using language naturally and when you’re stuffing keywords solely for SEO purposes.

Include High-quality Images

It’s proven that high-quality images lead to more sales than average images.

When someone walks into a shop and buys a product, they get to see it with their own eyes and feel it in their hands. When they buy online, they don’t get this benefit. Instead, they’re reliant on your images and words to give them a good feel for your products. This is why your images are so important and can make a significant difference in the success of your ads.

High-quality images are likely to get more clicks and help boost your conversion rate.

Promote the Items That eBay Recommends

eBay faces huge competition for your advertising money. If it doesn’t deliver results, it knows you can easily go to Google, Amazon, Walmart, or any other number of advertising platforms to boost your sales.

To ensure this doesn’t happen, eBay uses its vast amount of data to recommend which items you should think about advertising. These “handpicked” recommendations are the products eBay believes are most likely to benefit from a promoted listing and have a “Recommended” tag next to them in your campaign manager.

Perfect Your Listing Title

When someone sees your ad in the search results, they don’t have a lot to go on. All they see is your title, a thumbnail image, pricing, and some details about shipping.

There aren’t many opportunities to earn someone’s click.

This means small details can make all the difference, and your title is a huge part of this. If you can create concise titles that match user intent, you can give yourself a much better chance of getting the right people to click your ad.

Sometimes people create product listings or blog content, and the title is an afterthought, but this is the first thing everyone looks at. They might just be a few words, but titles play a massive role in whether someone clicks your link and reads through your product listing.

Review Your Performance

One of the great things about advertising online is you have access to so much data. Information is power, and when you make the most of your analytics, you’ll find ways to optimize your eBay ads.

Head to the “Performance” tab in your promoted listings dashboard and make use of metrics such as impressions, clicks, and sales to evaluate how your eBay ads are performing. If you’re not getting the results you want, consider making changes to your titles, product page, bid price, and images. Make sure you keep checking the performance until you find the formula that works.

Conclusion

eBay ads give you an excellent opportunity to reach a targeted, engaged audience of buyers.

However, as with any e-commerce platform, there’s a ton of competition, and you need to be able to find ways to stand out from the crowd. eBay ads give you this opportunity, but you’ve still got to be creative with your titles and make sure your product listings are perfectly optimized to create sales.

For most sellers, promoted listings are going to be the best option to allow them to reach more customers, and they’re easy to set up and very effective. One of the nice things about this ad format is that you don’t pay until you see results, so you’ve got plenty of opportunities to optimize your process and make sure your eBay ads are working for you.

If creating your own ad strategy and optimizing your product descriptions or website isn’t up your alley, reach out to our agency. We can help!

Have you had success with eBay ads?

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Source: https://neilpatel.com/blog/ebay-ads/

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30 SaaS Founders on Raising Money and Venture Capital

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At Bigfoot Capital, we wanted to know how early-stage companies think about capital as a component of their business. To do so, we decided to ask 30 SaaS Founders their thoughts on raising money and venture capital.

In this article, we break down the questions asked and the insights shared on raising capital for SaaS businesses. Let’s go!

Key Takeaways from SaaS Founders

The key takeaways below show how each of the Founder identified themselves as a business owner, along with their main focus in the business:

  • Product: 70% of Founders characterized themselves as at least partially product focused, with 1 in 4 describing themselves as solely product focused.
  • Generalist: 40% of Founders see themselves as generalists
  • Sales and Marketing: 25% included sales and marketing as a focus.
  • Operations: Only 10% listed operations as a core focus and 0% listed it as their sole focus.

Note: 83% of the group had started more than one company with almost 60% on their third company.

Raising Capital for Your SaaS Business

Question: How do you think about capital for your business?

The answers were a bit all over the board, but over 25% of the group noted that they see capital as fuel to accelerate growth for their company.

Nobody expressed raising capital as a core component of their business.

In their own words

  • “Like I do about blood for my body… and food”
  • “I view it as oxygen that gives us time to capitalize on opportunities”
  • “Our goal is to build the business first and use capital to accelerate and improve it. Building a profitable business is a priority.”
  • “Good if you have a real business model and want to scale, but only want to take it when I really need it and when it’s a good deal. Hate the “We raised XX million so we’re successful” idea that’s so prevalent in tech”
  • “Want investors to come in with relationships, not just capital.”

Experience with Raising Capital

Question: What has your experience been in raising capital?

Not all of the Founders we interviewed have raised capital. The ones who had primarily did so via accelerators and angels.

Only about 25% of those we talked to raised venture capital.

The common theme: raising capital is a time consuming and difficult process to navigate.

In their own words

Some had good experiences:

  • It’s situational and having a founder track record helps.
  • “Varied between easy and PITA [Pain in the Ass].” — 4-time Founder
  • “Generally easy as a repeat founder, but time-consuming to get the valuations I want from people outside my immediate network.” — 5 time Founder
  • “Mostly positive. Had to hustle and didn’t find many early-stage investors in [my state]. Mostly tire kicking local angels. Had to go out of state to find real money.” — 2-time Founder
  • “Good, but wish I had known more of the mechanics, early on.” — 1st-time Founder

Some had not so good experiences:

  • It’s a slog. “It’s more work than anyone can imagine, but I managed to do it.”
  • VC is not the only path:
    • “I spoke with and met with VC’s who didn’t think our market had big enough potential. But I didn’t have [the] time or desire to fundraise full-time for 6 months to right the right person who would believe in us and land a deal. We spoke with some mentors who recommended we continue bootstrapping, so we cut expenses and are making it work with our revenue.”
  • “Not great in general. We’re a very focused tool and don’t have an Uber-like “take over the world” story. The economics for VC don’t fit what we are as a company, so it generally was a struggle.”
  • Confusion: “It’s been incredibly difficult and the traditional VC route has proven to be tricky to navigate. Most don’t respond, are inconsistent with their stated philosophies, and the definitions of the various rounds are inconsistent at best.”
  • The Warning: “Most “groups” and people are not legit. They are simply trying to make money from startups (as in fees, etc). Finding real investors is difficult and there are a lot of weeds to dig through.”

Venture Capital

Question: In your own words, how would you describe venture capital?

The Founders we spoke with tended to see venture capital for what it is, fuel for growth for a specific type of company, namely one that has aspirations to and actually could become enormous.

Although, many referred to it as a “necessary evil”.

In their own words

  • “A necessary evil that can be greatly helpful.”
  • “Necessary evil in some cases, massively helpful game-changing in others.”
  • “A painful but necessary distraction to getting things done.”
  • “A means to an end.”
  • “Smart people that are good to work with.”
  • “Kind of like a game. You have to play by certain rules, hone your networking/sales skills, and hopefully find luck on your side. It’s an interesting industry where you can find great people and value if you hustle and trust the process.”
  • “I like the way they work. Fast decisions, good questions. Mostly reasonable. Though they are all different, so tough to generalize.”
  • “Understand what you’re going after and getting into.”
  • “Great, but scary if you don’t understand some of the expectations and dilution.”
  • “Use it sparingly to accelerate a company to a specific outcome (or not), if you’re willing to sacrifice some optionality for outcomes/company direction.”

Debt financing, Lender, or both?

Question: What do you think of when you hear the words “debt financing” and/or “lender”?

“Real estate and non-tech industries. “Lender” in particular makes me think of scams although lending isn’t inherently bad.”

The Founders’ theme was that debt is generally for companies that are non-tech and are cash flowing or have assets to serve as collateral.

This is a common misperception as it’s generally been the case, but that’s changing (at least we hope so given that we provide debt capital to tech companies that aren’t cash flowing for a living).

There were mentions of its value, specifically around not having to take equity dilution, but words like “expensive money,” “exploitative,” and “skiddish” were also in the mix.

In their own words

  • Fear:
    • “That I’m going to lose my house and ability to send my kids to college if I take it.”
  • Interest:
    • “This is definitely something that we are going to consider as—for the right business at the right time—it is a great source of funding that does not dilute your equity.”
    • “Debt is a great tool to grow a business and finance growth.”
  • Legacy Thinking:
    • “Generally old way of thinking, not in touch with higher-velocity, high-margin SaaS, and/or internet businesses. Probably wouldn’t apply to us because we don’t have traditional collateral to secure debt.”
    • “A little skiddish as it doesn’t sound like a true partner for your business. Although could be an option if you have steady cash flow and want to retain ownership. I see it as a compliment to a venture capital raise.”

Summary

When it comes to raising money, SaaS Founders recognize that venture capital is not the only way. That narrative is pervasive and misleading for the vast majority of Founders. VC’s fund <1% of the companies they look at.

As a debt capital provider for early-stage SaaS companies, we’ve got our work cut out for us to help early-stage Founders see the light 🙂

That’s part of the fun in it after all.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://baremetrics.com/blog/30-saas-founders-on-raising-money-and-venture-capital

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