What are the key factors and practical insights for founders to consider when making capital choices for their SaaS businesses?
In a recent discussion led by Lakshman Gupta Kanamarlapudi and Kaustav Das, the focus was on the pivotal decision-making process SaaS founders undergo in selecting an effective capital strategy. With the SaaS landscape evolving swiftly, gaining practical insights into key factors becomes crucial for founders aiming at sustained growth and success.
Watch the full video here - https://lnkd.in/gY_zG6xr#SaaS#GrowthCapital#Funding
For all of the founders, SAS founders, non SAS founders, one year, three-year, five year is a typical thing that I said that debt or financing is your friend right, especially where we are right now and it does not mean it's efficient capital or revenue based. Financing, any sort of alternative financing is your friend, right? Don't shut the doors, don't get out of that feeling that it's a stigma. There are many, many, many positive. This is what it's going to help you grow. As Lakshman put it, the 5% of dilution that you are saving for your seed round or your Series A is actually a multiple that you're saving when you become a multi $1,000,000, maybe even a billion dollar company, right. So this is the time for you to consider alternative capital. This is the time for you to be smart. And save on that dilution. I think just to add to what causes said means both instruments are corrected and both of them are right at a particular point of her time. And equity has its own importance to raise at the right point of time because you need to scale at the right point of time. And equity as Caesar mentioned is a multiple and it gives you that fuel to grow and particularly when the market conditions and their competitive landscapes changing or you want to expand it gives you that fuel but also raising disproportionate equity with will hurt you in the. Longer than and it also would provide disincentives between the founders and and and the shareholders because the founders would get heavily diluted and there's no incentive for them to perform. And then raising the keeping the debt in mind of the various forms in debt again all forms of debt are good and also at the right amount of time where the venture debt supply financing or the if what efficient capital apps is providing all need to be explored at the right at the right level of businesses for the right scale of businesses and use it effectively. So that you can extend your cash runway both for working capital or for your any other acquisition or M&A opportunities and then scale properly. But one thing is that we close to profitability as much as possible so that you are ready for any market downturns. Yes, I think that's that's a that's a golden rule. I guess every startup founder is now, you know, gravitating towards so wonderful gentlemen. I think this was a very, very fascinating discussion.
