Staying on top of our industry
December 5, 2022
Amidst all the work being done internally on 2023 strategic planning, there's been quite a bit happening overall in the industry and several good articles that have come out in the past few weeks that are worth reading through. Here's a collection of them below:
Series B and Beyond Expectations
What does it take to raise capital, in SaaS, in 2022? (Click Here) - This is outdated already as this was last updated at the end of July but it's such a stark change from the last version of this in late 2021. Revenue multiples have come down and valuations have followed suit. This was around the time we received our term sheet from White Star and we were directionally close in terms of the metrics being shown here. As the markets turned, all of these numbers have come down even further.
How much Revenue per Employee Should I Expect for my Startup? (Click Here) - This is one of the key metrics that we will be measuring ourselves against going forward. It's interesting to see that VC backed companies tend to actually have lower revenue per employee but it makes sense - if you're self-funded, you're going to hire less and have to do more with less. We should aim and strive for that hustle mentality.
Deposit Beta: CAC in Disguise (Click Here) - Fresh off of our own first close, we have the luxury of being able to do treasury management for the very first time. In this new high rate environment, we are going to be putting our idle cash in our operating company to work to offset our expenses.
Market Outlook
US Banks Are Tightening Lending Standards, Raising the Risk of a Recession (Click Here) - If the banks are doing this, we should ensure that our borrowers are doing this as well. Underlying asset performance inevitably deteriorates in times of market uncertainty and we need to make sure our borrowers are maintaining quality lending standards.
Investors point to risks of venture debt (Click Here) - A good crash course in venture debt, how it works, and its pros and cons, but more importantly, we're seeing the same stricter lending standards affecting venture debt as well. We're in a capital allocator/investor's market right now and they can dictate the terms.
Fintech and Private Credit
SVBs State of Fintech 2022 (Click Here) - A great overview of the fintech market these last few months and just how severe the valuation compression has been, especially for later stage companies. The shift away from consumer is also notable as times of market distress tend to impact consumers more and the metrics from these companies are likely surfacing these problems.
Partner Bank Compliance and the Impact on Fintech (Click Here) - The partner bank section is interesting but the more relevant section to us is part about private markets software. They've been describing our playbook, albeit we've been doing it in parallel instead of starting with software first then market. What they fail to recognize is the willingness of the investor side of the equation to be compelled to purchase software unless they get the net benefit of deal flow, which matters most to them. Without a market, you will rarely get the deal flow.
5 kinds of embedded business lending and financing (Click Here) - A good crash course in all types of lending and financing offerings that essentially encapsulate our borrower universe on the asset-based side. We've provided financing to most if not all of these types of sub-asset classes.
It's always good to stay on top of what's going on in the broader market as we're going to need to be as nimble and adaptable as ever in the coming year 📖
