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August 2, 2021

Why You Should Commit to Hit a $2bn Valuation?

For the company I co-founded, Arria NLG, we always aimed for a billion-dollar valuation.  We hit that recently ($1.2bn) and it is a great feeling, but the company is nowhere near done.  We have raised our sights considerably.

In the formation of Arria, back in 2011, I discovered a small scientific tech business based at the University of Aberdeen.  After bringing in co-founders, we saw the potential and we realised that if we did not think ultra-big, there would be more chance of us being stopped by obstacles.

The news stories, where I live in New Zeland, show Founders selling their SaaS Business for all sorts of values: $100m, $455m, $1.45bn.  These are big numbers for Founders and for their investors.

However, you have to think about the risk of the business diminishing over time as the cash accumulates and market dominance kicks in.  What are the chances that a SaaS business that sold for $1bn could get to $2bn?  Pretty high.

People have a reason for selling.  Whether it is the heat from those who have invested, the board’s timing or the Founder’s sense that they have achieved something; that is the time that SaaS Businesses are sold.

But if you are a SaaS Founder you have influence over who invests, over who sits on your board and also over your own mindset when it comes to targets you set yourself.

So that is why I believe if you set your sights on $2bn you don’t come across as just another upstart wanting to create a unicorn (that’s only halfway); and the chances that you’ll settle for less than halfway (under $1bn) are slim.  That’s if the cards go your way.

I know capital can equal greed and it can be a little grating reading all of this.  If you find it uncomfortable reading this talk about money and not about impact on the world, just think of this: are either Rod Drury or Hamish Edwards (who co-founded Xero together) able to impact the world with their wealth in positive ways with their capital from Xero?

Make the wealth by aiming for $2bn and then you can use that to impact the world.

Final story... 

I remember back when Diligent had real struggles with capital and there were some tough times.  But within a few short years, it became a sales juggernaut.  Then Diligent had a new issue; it was sitting on too much cash in the bank.  Eventually it was bought and is around $4bn in value today.  The founders, who bought me in pre-IPO, along the way knew the potential value and got 100x ARR at its listing just after Xero’s list in 2007.

Contact us today to talk about your Valuation and how to double that up in double-time.

SaaS Elevator Capital:  We help SaaS Founders raise Capital & Debt

SaaS Elevator Exits:  We help SaaS Founders Sell or Merge

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