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As I noted previously, one of the most interesting content sources out there for those interested in the startup world is Tomaz Tunguz’s blog. Previously I highlighted some interesting information he had dug up on the correlation between the location of your startup and its ability to raise capital, as well as the correlation between the sector you’re startup is in and its ability to raise a Series A round.

Now, Tunguz has come up with some quite interesting information on the pre-IPO financing trends for billion dollar software as a service (SaaS) companies. Below is an interesting graph he has come up with showing 41 SaaS startups and the amount of money raised prior to their IPOs.


Some of these startups have raised some serious dollars, starting with Box, which has raised almost $500 million so far before it has even gone public. It turns out that over the last 16 years, the number of pre-IPO financing rounds has doubled has doubled, which has doubled the amount of capital a SaaS startup raises in aggregate before IPO. Given the advent of the cloud, it is not surprising that SaaS startups have become such popular investments for VCs. Of course, the ease of launching a SaaS startup due to the cloud cuts both ways for SaaS startup founders in my opinion. Clearly, there are tons of SaaS startups out there, and off the top of my head, I’d venture a guess that to succeed in the market a SaaS startup has to be able to show some kind of concrete differentiator for its products.

Tunguz provides a brief chart here outlining some of these trends. As we can see, the number of financing rounds raised by SaaS startups has gone from 2.5 to 4.5, and not surprisingly, the amount of money they’ve raised prior to their IPOs have more than doubled as well. My conclusion: If you’re the founder of a SaaS startup you’ll probably never have a better environment to raise some serious money to grow your business!

IPO Cohort

Median VC$ Raised

Median # of Rounds

Median Round Size $M

Median IPO Size

Number

1998

42

2.5

17

97

2

2002

71

3.0

24

86

7

2006

66

4.0

16

122

13

2010

101

4.5

22

137

18

 

 

 

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