SA国际传媒

knows a thing or two about funding SaaS startups.

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The 41-year-old firm invests primarily from Series B onwards in enterprise and consumer-focused companies that have product market fit.聽

Earlier this year, IVP closed on a $1.8 billion fund鈥攊ts 17th fund and largest to date 鈥� and has already had 10 IPOs out of its portfolio this year, including big names like , , , .

Given its track record, IVP partners and recently teamed up to write the firm’s 鈥攁 primer for subscription software founders on the metrics they need to understand when raising capital from investors.

The goal is to make life easier for both founders and investors, as well as to provide insights for founders on how a partner at a venture firm gets to conviction and decides to provide capital.聽

鈥淲e put together all the knowledge that we’ve accumulated over many years, put together benchmarks that are helpful around growth, net dollar retention, key metrics that are really important to SaaS companies,鈥� Saljoughian said in an interview. 鈥淎nd then some perspectives on key pitfalls to avoid.鈥�

So far this year, IVP鈥檚 portfolio has including Coinbase, , Robinhood, , SoFi, Compass, , ZipRecruiter, and . That marks an all-time record count for the firm, per SA国际传媒 data, and more are slated to come later this year.

It has also increased its , leading the Series C rounds in online events company , healthy heart monitoring company , and edtech online tutoring company , among others.聽

Saljoughian and Miao anticipate that geographies outside the U.S. will become important for IVP鈥檚 new fund, especially Europe and Southeast Asia.聽

With that in mind, here鈥檚 a closer look at some of the top metrics the IVP partners look at when considering SaaS startups to invest in.

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One of the most important metrics they look at is a company鈥檚 growth rate.聽

鈥淚f we see a company growing in the 90th percentile, that gets us incredibly excited, and if we see a company growing at the 75th percentile, that gets us incredibly excited,鈥� Saljoughian said. 鈥淲e’re just looking for a signal, for something here that is really working. And then it’s on us to go look at sales efficiency, to go look at the market dynamics, to look at, 鈥淗ey, do we see a path for this becoming a $1 billion, $5 billion, $10 billion, $20 billion company?鈥�

Revenue is one data point

鈥淭hat’s not to say that’s a hard and fast rule at IVP,鈥� Miao added. 鈥淲e frequently invest in companies that are at the 50th percentile. You’ll see in the SaaS handbook, revenue and ARR growth isn’t the only indicator of a company’s future success and potential.鈥�

Partners also look at the management team, market size and customer feedback.聽

鈥淭he quantitative stuff鈥攖hat’s probably 50 percent of it,鈥� Miao said. 鈥淭he qualitative stuff, the other 50 percent.鈥�

Per the handbook, SaaS multiples for public companies are at an all-time high for the 58 companies they reviewed. The average for the past five years is 11.8x revenue over the next 12 months.聽

But in the past three years the multiple has jumped聽 to 14.7x. In the last year, it鈥檚 climbed further still, to 19.8x鈥攁n all time high.聽

Increasing the efficiency of the fundraising process

The spreadsheets and analysis in IVP鈥檚 20-page handbook can assist as startups fundraise, but can also help founders calibrate business success as well as benchmarking for their boards.聽

鈥淭his tailwind of technology innovation is much greater than the headwind of increased competition,鈥� Miao said, speaking about the impact of hedge funds in late stage investing as well as earlier-stage funds raising growth funds. 鈥淲e think competition is just better for entrepreneurs.鈥澛�

As a result, IVP鈥檚 investors look to be well educated on a company in advance of meeting in order to have a productive conversation on how they can partner and move quickly should the firm plan to invest.聽

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