There’s a pre-IPO stage SaaS company I have been tracking …
… for years.
I’ve always wanted to invest, purely based on the quality of their product.
Late last month:
I got my chance.
A shareholder wanted to sell some common.
But now that the opportunity was in front of me.
Did I actually want to follow through?
Did I actually want to follow through?
Here’s how I thought about it.
And the homework I did to get to an answer.
First, I looked at public market revenue comps for SaaS companies.
Recently IPO’d peers were trading at a ~10-12X forward multiple. My research indicated the company was probably doing $10-$15MM in ARR. Based on the price per share offered, that all checked out. I wouldn’t be getting a steal of a deal…but it was definitely “market”.
I looked at their ‘Jobs’ page. Here’s what I was happy to see:
- They were hiring a bunch of Partner Managers. Later stage software and SaaS companies need to scale the channel to get to the next level. Seeing investment there was a good sign.
- They were hiring in Revenue Accounting, with a job description said…
I checked out their hiring trends.
LinkedIn Premium let me scope this out. Not a surprise to see a big drop off at the end of the year, but I was glad to see things hadn’t ground to a complete halt:
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And I found it encouraging that there was modest headcount growth in Engineering over the last 6 months.
i.e. They’re still investing in product innovation, even in a softer market…
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I asked the intermediary for ‘Assure’-ance.
Since this opportunity came to me through an intermediary, my investment would be made into an SPV. Which can get blown up if the host of said SPV vaporizes. So I wanted to know how this situation would be handled, if it came to be.
And I wanted to know what the preferences looked like for existing preferred stock holders.
Like, did the last money in have a multiple liquidation preference?
Fortunately, this was not the case here.
Could I have gone deeper than this?
Sure.
But for an angel sized investment, this felt like the right level of time investment.
Of course, YMMV 🙂
