Rob Walling

But if I sell now, I'm set for life and I can work on whatever I want. forever, the calculus really changes. So whatever way you choose, you know, if you're listening to this, maybe you're thinking about, yeah, I want to be able to quote unquote retire for three to six months as most entrepreneurs do before they get back in the game. Or you want to run it for the long term. That's okay.

But if I sell now, I'm set for life and I can work on whatever I want. forever, the calculus really changes. So whatever way you choose, you know, if you're listening to this, maybe you're thinking about, yeah, I want to be able to quote unquote retire for three to six months as most entrepreneurs do before they get back in the game. Or you want to run it for the long term. That's okay.

I'm just calling out some patterns that I'm seeing with our companies. The fifth takeaway is I looked at only our seven and eight figure ARR companies. So if a company's doing millions or north of $10 million in annual recurring revenue.

I'm just calling out some patterns that I'm seeing with our companies. The fifth takeaway is I looked at only our seven and eight figure ARR companies. So if a company's doing millions or north of $10 million in annual recurring revenue.

And I found that the founder count for these types of companies are very close to being in line with all the founders across the ecosystem from the state of independent SaaS reports. So in this example, 53% of seven and eight figure tiny C companies are single founders. 33% are two founders. 14% have three or more founders.

And I found that the founder count for these types of companies are very close to being in line with all the founders across the ecosystem from the state of independent SaaS reports. So in this example, 53% of seven and eight figure tiny C companies are single founders. 33% are two founders. 14% have three or more founders.

And just to compare, again, the successful tiny seed companies, 53% are single founders. And in the broader state of independent SaaS, microcomps, startups, the rest of this ecosystem, 51% are solo founders. So 53 versus 51. With two founders, it's 33 versus 34. And with three or more founders, it's 14 versus about 15.5%. So why do I bring this up then?

And just to compare, again, the successful tiny seed companies, 53% are single founders. And in the broader state of independent SaaS, microcomps, startups, the rest of this ecosystem, 51% are solo founders. So 53 versus 51. With two founders, it's 33 versus 34. And with three or more founders, it's 14 versus about 15.5%. So why do I bring this up then?

Well, I don't think founder count, at least in this analysis, has that much of a difference on success. I know that growth numbers in the state of independent SaaS show that for some reason there's an anomaly with three founder companies. I'm still curious to figure out why that is, but I find it fun to often compare to the broader ecosystem with this much smaller and tighter data set that we have.

Well, I don't think founder count, at least in this analysis, has that much of a difference on success. I know that growth numbers in the state of independent SaaS show that for some reason there's an anomaly with three founder companies. I'm still curious to figure out why that is, but I find it fun to often compare to the broader ecosystem with this much smaller and tighter data set that we have.

My sixth, learning. Really, it's just a thing to share is that we have had to turn down many deals where we have made offers or were about to make offers, but their cap tables were ruined. So an example of this is a founder left and took their equity. And whether they own a third or half the company, they didn't have vesting in place. And now the company is kind of unfundable.

My sixth, learning. Really, it's just a thing to share is that we have had to turn down many deals where we have made offers or were about to make offers, but their cap tables were ruined. So an example of this is a founder left and took their equity. And whether they own a third or half the company, they didn't have vesting in place. And now the company is kind of unfundable.

If you come to us and we're typically the first money into a company and the founders own less than 70%, that's not a good sign. And sometimes we are the second money in, so there are exceptions to that. But certainly you want the founders to own 70% to 80% and up. And so we've seen companies where, again, there's one or two founders left and they own like 50% of the equity and 80%.

If you come to us and we're typically the first money into a company and the founders own less than 70%, that's not a good sign. And sometimes we are the second money in, so there are exceptions to that. But certainly you want the founders to own 70% to 80% and up. And so we've seen companies where, again, there's one or two founders left and they own like 50% of the equity and 80%.

They can't raise funding in the future. They're basically working to put money in someone else's pocket. It's just a really bad scene. The other thing we've seen is that there are some really sharky investors out there that give extremely low valuations or they have these exploding terms where if you raise before paying them back,

They can't raise funding in the future. They're basically working to put money in someone else's pocket. It's just a really bad scene. The other thing we've seen is that there are some really sharky investors out there that give extremely low valuations or they have these exploding terms where if you raise before paying them back,

then suddenly they own three times the equity that their original document said. And these investment terms can make the company uninvestable. It's unfortunate, but we've especially seen it in Europe where an angel will invest at like, I don't know, I'm trying to think of an example. There was like a $50,000 check for 25% of the company.

then suddenly they own three times the equity that their original document said. And these investment terms can make the company uninvestable. It's unfortunate, but we've especially seen it in Europe where an angel will invest at like, I don't know, I'm trying to think of an example. There was like a $50,000 check for 25% of the company.

So they invested a $200,000 valuation and that, it's just rough. So now you have this investor who's not doing anything, not providing a value add. And, you know, it's on the cusp for us of like, ooh, would we be willing to do that? But realistically, just giving you examples of ways that it's easy to torture cap table, like be careful.

So they invested a $200,000 valuation and that, it's just rough. So now you have this investor who's not doing anything, not providing a value add. And, you know, it's on the cusp for us of like, ooh, would we be willing to do that? But realistically, just giving you examples of ways that it's easy to torture cap table, like be careful.