Weekly SaaSology ⚡ 01.23.22
Demo Experience Platforms 💻, Headless Commerce Tools 📱, and Term Sheets 📝
Feels like we could all use a breather after experiencing one of the most enthralling playoff weekends in the history of the NFL 🤯. I took a break from writing last week as I had a LASIK surgery and was expected to avoid devices post-procedure. In hindsight, it made me realize how we’re surrounded by digital screens everywhere in our daily lives and should plan for a digital detox weekend every once in a while 🏖️.
As promised in the last issue, here are the top non-fiction recommendations 📚:
Empire of Pain: The Secret History of the Sackler Dynasty by Patrick Radden Keefe
Why We Sleep: Unlocking the Power of Sleep and Dreams by Matthew Walker
Sapiens: A Brief History of Humankind by Yuval Noah Harari
Thinking, Fast and Slow by Daniel Kahneman
A Swim in a Pond in the Rain: In Which Four Russians Give a Master Class on Writing, Reading, and Life by George Saunders
Top Five Investments 🚀
1Password, a Toronto-based password management platform 🔒, raised $620 million at a $6.8 billion valuation in Series C funding led by Iconiq Growth. It provides a place for users to store various passwords, software licenses, and other sensitive information in a virtual vault that is locked with a master password. It currently serves over 100,000 customers including Datadog, Intercom, and Snowflake. Check out this issue of SaaSology for a recap on its developer-focused rival, Stytch, and the broader password management space.
1Password Mantra Health, a New York City-based digital mental health platform, raised $22 million in Series A funding led by VMG Partners. Mantra Health provides virtual mental healthcare services to college students in the US. By combining clinical services 🧑⚕️ with software and design, the platform aims to improve the mental health of over 20 million students through partnerships with education institutions and insurance plans. Its care program has been deployed on 52 college campuses, including Penn State, Miami Dade College, and MIT.
Walnut, a Tel Aviv-based demo experience platform, raised $35 million in Series B funding led by Felicis Ventures. Walnut’s no-code platform enables teams to create customized product demos quickly, be able to integrate them into their sales and marketing processes, and then generate insights from the demos. Since their $15 million Series A raise four months ago, Walnut grew a staggering 700% in ARR. It serves over 100 customers, including Adobe, Dell, Medallia, and ContractBook. More on demo experience platforms 💻 below.
DeepScribe, a San Francisco-based AI-powered transcription platform, raised $30 million in Series A funding led by Index Ventures. It aims to unburden doctors ⚕️ from tedious data entry by recording, summarizing, and integrating conversations into their system of record. It serves more than 400 physicians in the US and saves them over three hours a day on average. Just like every other AI-enabled tool, it continuously gets smarter by listening and learning about a physician’s conversation style, preferred phrasing, and writing preferences.
Tenor Swell, a San Francisco-based headless commerce platform, raised $20 million in Series A funding led by VMG Catalyst and Headline. “Headless” means that the front end of a website (storefront) is disconnected from the back end (data), enhancing user experience 📱 and allowing the back end to be updated without disturbing the front end. In 2021, Swell grew ARR by 500% and grew its customer base to 1,000+. More on headless commerce below and a brief overview of its rival platform, Vue Storefront, in this issue of SaaSology.
Top Two Trends ☁️
Demo Experience Platforms 💻
Perfecting the product demo is key to success for go-to-market teams. Since they rely heavily on video communication tools like Zoom to deliver these demo experiences to potential clients, conversion rates have steadily dropped in the past few years. Sales teams depend on back-end developer teams and graphic designers to deliver a presentable and personalized dummy version of the platform. These processes are usually time-consuming and expensive and can often serve as a huge pain point for teams largely due to the increasing need for collaboration to manage the infrastructure, measure engagement 🖱️, capture analytics 📊, produce custom content, and adjust admin-level features.
Giphy The leading tools that focus exclusively on the demo customization and experience market are Walnut, Reprise, Demostack, Demoflow, and Navattic. With only a few demo experience platforms in the market today and even fewer that have raised significant funding, it is not the first platform that goes to market but the most effective one in delivering positive outcomes for GTM teams 📈 that is poised to be more successful in the sales enablement market. These tools need to allow sales professionals and other go-to-market teams with non-technical skills to design content and control the narrative without depending on R&D teams and compromising data security. This can also increase the potential for product-led growth (discussed in this SaaSology issue), which is another trend for startups to capitalize on and scale rapidly.
Headless Commerce 📱
Online purchases have traditionally been made possible by an e-commerce solution with a monolithic architecture. Meaning the CMS, cart, checkout, subscription function, and site design are interdependent. Changes to one part require changes elsewhere - which can make updates slow and painful 🥱.
The traditional, monolithic approach has the advantage of being relatively easy to get up and running. Businesses have everything they need to set up a store front, display products, and process payments right out of the box which lowers barriers to entry 🏬. However, as brands scale, retailers are finding out that traditional platforms limit choices and the ability to engage with customers.
For instance, it’s very difficult to build stunning sites like something as slick as Apple.com. The rich merchandising, micro animations, as well as unique customizations (which help propel DTC brands to the next level), become increasingly difficult to execute within the confines of traditional e-commerce platforms like Shopify, BigCommerce, Magento, and WooCommerce 🏪.
Giphy With headless commerce, web stores’ front and back ends are separate from each other, giving the front-end layer space for endless design capabilities. With an API feeding data between the front end and back end, the API carries most of the workload, making it simple for organizations to manage changes and improvements to their web store UI. This architecture offers brands freedom of expression to build whatever and however they want. It also enables brands to enrich the customer experience and speed up load time ⌛.
While traditional tools like Shopify are adding headless capabilities, there are several platforms that dedicatedly focus on this solution - Elastic Path, Nacelle, Swell, and Commerce Layer. Ultimately, shoppers don’t care about whether or not stores use headless capabilities (as they can’t identify it while visiting the website), but they do care about how they experience the brand digitally and they’ll evidently recognize faster load speeds and smoother site navigation 📱.
Startup Spotlight ✨
Founded in 2016, Linktree is a Melbourne-based link-sharing tool that can be used across multiple social networks 📱 to provide access to a brand or individual’s most important content, all in one place. Businesses and individuals can use the tool to create actionable links for services (like Instagram) that don’t allow direct linking from posts. While other “link-in-bio” tools exist, Linktree averages 30,000 daily sign-ups and has over half a billion website visits each month. It is currently used by over 20 million people and has raised over $50 million in funding with over 223 employees.
VC Topic of the Week 📚
No single piece of paper is as pivotal in determining a startup’s future as a term sheet.
Term sheet is a non-binding agreement prepared by an investor that outlines the terms and conditions of an investment, especially around economics and control.
Term sheets typically cover the significant aspects of a deal without detailing every minor contingency covered by a binding contract 📝. It essentially lays out the groundwork for ensuring that the parties involved in a business transaction agree on major aspects. Term sheets can get quite complex but are usually short and <10 pages.
It often forms the basis of more enduring and legally binding documents, such as the Stock Purchase Agreement and Voting Agreement ✍️. Although short-lived, the term sheet’s main purpose is to lay out the initial specifics of an investment such as the valuation, amount raised, class and number of shares, investor rights, and protection clauses. We will break down each of these terms in future editions of the newsletter.
There are many resources available for researching term sheets 📚. NVCA (National Venture Capital Association) and Y Combinator offer term sheet templates for early-stage startups that are raising capital. Venture Deals by Brad Feld is also an excellent resource for learning more about term sheets for entrepreneurs and investors alike 🤔.
Tweet of the Week 🐦
Hope you have a great week ahead, and I’ll see you again next weekend 🍹
Feel free to reach out to me by replying to this email or @dhruvcashpoor on Twitter!
This newsletter is intended for informational purposes only. Sources: TechCrunch, Twitter, Giphy, Tenor, 1Password, Linktree, Shogun, Walnut, Investopedia, YC, SVB, NVCA