4 ms·
> Seed rounds are bigger: At Heap, we raised $2M on a $12M cap after having a working product and some early traction. Today, it's not uncommon to see a pre-pro
by LurkingPenguin 5y ago
> Seed rounds are bigger: At Heap, we raised $2M on a $12M cap after having a working product and some early traction. Today, it's not uncommon to see a pre-product company raise $5M on $25M or even higher. However I think there's still a ways to go–SaaS outcomes have grown in size more than 10x in the last 8 years, but seed valuations haven't climbed 10x.
Why would the valuations climb 10x? This makes sense given the author's second observation:
> There are way, way more SaaS companies and getting initial traction is harder
The rounds are bigger because more money is needed to compete. But investors would lose their shirts if they multiplied the valuations by 10-fold.
- raviparikh 5y ago(I'm the author of the post - thanks to whoever posted this to HN!) This is a good point, if probability of success decreased 5x while average outcome increased 10x, then a 2x increase in seed valuations would be reasonable. I don't actually know the differences in probability of success / expected value for the typical seed stage startup, but anecdotally it doesn't feel less likely. It is definitely harder to get off the ground, but I see a lot fewer companies (anecdotally) stumbling in the "middle" part of the journey between $2M to $100M in ARR or so, whereas I feel like in the past a lot more hot SaaS companies used to stall out. So I think that washes out against the harder initial stages.
- donnythecroc 5y agoYou are no.1 on HN. Would be interested to see if this drives more customers for you than launch post!?
- raviparikh 5y agoI hope so! We did a "Show HN" but it didn't really catch on–oh well. So far this has driven a small bump in signups in the last hour though.
- bpodgursky 5y agoThe world is bigger; more people are part of the economy; the average person is wealthier; the average person is more productive; the average person or company spends more of their income on services than in 2013. In a winner-take-most market, it's easier for the acquirer to leverage a successful SaaS company 10x what they could in 2013. This doesn't surprise me.
- deleted 5y ago[deleted]
- NmAmDa 5y agoAverage person in united states maybe
- lotsofpulp 5y agoI would bet the opposite. Average person in US gets less wealthy, average person globally gets more wealthy. Tenth decile in US gets more wealthy, 9th tread water, and the other 8 deciles revert to global mean.
- tdfx 5y agoBut even globally, most of the financial acceleration in the developing world is only happening for the top quarter (or less) of the population.