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Welcome to our monthly wrap-up episode where we cover July’s most relevant content at the intersection of startups, VC, data & AI.
Said differently: We curated a summer reading list for you👇
MULTIPLES SNAPSHOT📸
88% of you want me to continue with the Multiples Snapshot - so I trust the data & repeat ;) Below is a snapshot from July’s state of the market. Full episode with all tables and deep dives here.
Source: Multiples.vc
Source: Multiples.vc
Source: Multiples.vc
INTERESTING RESEARCH & REPORTS📈
SaaS CAC Payback Periods Hit Troubling Highs
Kyle Poyar spotlights new data showing just how inefficient SaaS go-to-market teams have become. He shares numbers from Jamin Ball’s Clouded Judgement, indicating that sales and marketing costs now take years to recover, even for top performers.
Q1 2024 Average: Gross margin-adjusted CAC payback hit 57 months. That means even strong public SaaS companies need nearly five years to break even on new customer acquisition costs.
Best vs. Worst Performers: Zero public companies had CAC payback under 12 months. Only five were under 24 months, while 24 firms reported payback above 100 months or negative net-new ARR.
12-Quarter Trend: The average CAC payback over the past 12 quarters sits at 41 months, showing this is a persistent problem not explained away by one bad quarter or macro factors.
✈️ KEY TAKEAWAYS
Public SaaS companies face severe GTM inefficiency, with CAC payback periods stretching multiple years. This may force a reckoning as companies can’t rely on legacy customer subsidies forever.
Seed Round Liquidation Preferences Stay Standard
Peter Walker’s LinkedIn post analyzes current norms in early-stage venture deals, showing that seed and Series A rounds overwhelmingly use 1× non-participating liquidation preferences. He notes this consistency as evidence that founders shouldn’t fear hidden investor-unfriendly terms at these stages.
1× Non-Participating Remains Standard: Seed and Series A deals almost universally feature 1× non-participating liquidation preferences, with no cumulative dividends, keeping founder and investor interests aligned.
Bridge Rounds Often Have Tougher Terms: Bridge or extension rounds can include higher liquidation preferences, reflecting the higher risk for investors when companies raise unplanned interim capital.
Later-Stage Rounds Diverge: More mature rounds often include investor-friendly terms such as participating preferences or higher multiples, but these are not standard at seed.
✈️ KEY TAKEAWAYS
Early-stage funding rounds maintain simple, founder-aligned terms. Seed deals with preferences above 1× non-participating should be seen as warning signs.
