4 Key Takeaways from the Modern SaaS Finance Summit
“I have a board meeting next week and this event is materially changing how I think about and how I am going to present on the model and the direction of the business.”
This was a quote from a successful SaaS CFO that joined us for the first of its kind Modern SaaS Finance Summit. The summit was held at the same time as SaaStr in the middle of Silicon Valley on February 8, hosted by Sage Intacct. CFOs, Controllers, investors, and investment bankers all came together to build a powerful community focused on how to grow a SaaS company to $100M. Attendees not only learned from leading investors and successful peers, they also sat with and learned from peers with similar stage companies and billing models, going through similar issues as they grow.
Here are four takeaways from the event.
1.Every round of financing requires you to prove something new before you proceed to the next round. Aligning and simplifying your measures and leading indicators drives consistency across the team to achieve your objective.
- Seed – Prove Product/Market Fit – Get 10 Ecstatic Customer
- Series A – Prove your Revenue Model – Create great Unit Economics
- Series B – Prove your Net Renewal Model – Scale Cash Flow
- Series C-F – Grow to $100M in Gross Profit – Manage Capital Consumption
- Sale or IPO – Expand Product Line, Go Global, and/or Make Acquisitions – Build a Predictable Machine
2. In simplifying your measure, the Rule of 40 may not be the right one to choose.
Three different presenters gave three very different views on the Rule of 40, ranging from agreeing with it to blowing it up. They all agreed that managing to growth is critical and that growth drives valuation. They differed in the balance with profitability, and you might not be surprised to hear that it differed between venture investors and private equity investors. If I could simplify it, investment in growth drives recurring revenue as the growth compounds, but profit is a one-time event that does not repeat.
3. Quote-to-cash is the key process to automate for managing unit economics and capital consumption, but it takes people, process, and technology.
Depending on your stage, proving the revenue model or the net renewal model is the critical step. But, how do you do that? The answer: automate the quote-to-cash process. The key piece of advice here is, “It’s never too early to put the process in place.” Doing it successfully requires early collaboration between finance and sales operations. Take a mock order and go through the iterations that sales will have to go through to prove and give value to the customer. Work together to scale that flow, keeping an eye on the future and how you will manage and track upsells and contract renewals.
4. Folks want to be part of a Community.
There are CEO Forums. There are VP of Sales networking events. But where the heck are all of the finance leader groups? This was the primary piece of feedback from our customers that drove us to build the Summit. People want to learn from each other, and this summit set that tone. One table had Series B firms with land-and-expand models talking about unit economics for driving sales quotas. Another had post-IPO firms with high average contract value (ACV) models talking about how to slice cohorts in financial planning—and everything in-between. If you wish to join a local finance networking group in your area, we’re working with most of the prominent groups and would be happy to introduce you to the group. Some cities are looking for a first founder to kick off a group, and we have a core group and best practices that we can share with you. Just send me an email at David.Appel@Sage.com with the subject: “Community Group,” and we will connect you.
If you missed the event, the day started with a keynote from Jeff Epstein, Operating Partner at one of the world’s top venture firm, Bessemer Venture Partners, and former CFO of Oracle, alongside Marc Linden, CFO of Sage Intacct, on “4 Key Steps for CFOs to Grow to $100M.” Jeff and Marc’s talk was followed up by 4 sessions that dove deeper into their advice. We will be releasing upcoming blog posts that dive into each of these topics:
- Three best practices in building quote-to-forecast processes for land-and-expand subscription models from Workiva, Jobvite, and Weave
- What investors want to see from the Key Bank Capital Markets Annual SaaS Survey
- How Finance creates business value from the operating advisors and mentors at Vista Equity and Spectrum Equity, two of the world’s best technology private equity firms
- How to build the financial forecast for business models from $0M to $100M from Gainsight, Stack Overflow, Khosla Ventures, and Floqast
We will be hosting another Modern SaaS Finance Summit in New York in late spring and again in Silicon Valley in early 2020, so block the time on your calendar to leverage the community and insights from the Summit to drive your personal and company success.
About Sage Intacct:
Sage Intacct works with the finance teams of high growth SaaS and Subscription companies such as Gainsight, Bitly, and Weave to enable them to automate their quote to cash, subscription billing, forecasting, and other key accounting processes, allowing them to:
- Decrease quote-to-cash processing time and DSO by up to 30-50%
- Reduce time to close by 50%
- Shift from 80% manual to 80% strategic
You can learn more here.
David Appel is the Head of Software & SaaS at Sage Intacct, and is passionate about creating great B2B SAAS companies. Over time he has developed a series of SMB, Mid-Market, and Enterprise customer-lifecycle playbooks that focus on creating value for customers, increasing return for shareholders, and building great teams, that have generated over $1.1B in market capitalization for his clients.
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