Happy Sunday fellow SaaSologists! Let’s dive into this week’s deals and trends 🧐
Top Seven Investments 🚀
Workato, a San Francisco-based IT automation platform, raised $200 million at a $5.7 billion valuation in Series E funding led by Battery Ventures, with participation from Insight, Altimeter, and Tiger. The platform lets organizations set up and run automated solutions to speed up repetitive processes in their workflows. Last week, we talked about its rivals, Zapier and Merge, a B2B integrations platform backed by Addition.
Curated, a San Francisco-based personalized e-commerce 🛒 platform, raised $75 million in Series C funding led by CapitalG, with participation from Forerunner. The way it operates is simple - users respond to a few questions about what they’re looking for, and Curated matches them with a stylist that provides personalized suggestions. It compensates 1,000+ category experts to offer advice and provide users with the in-person shopping experience online.
Reprise, a Boston-based no-code product demo and analytics platform 💻, raised $62 million in Series B funding led by ICONIQ, with participation from Bain Capital Ventures, Accomplice, and Glasswing. SaaS companies use it to unlock product-led growth (more on this below) through an interactive demo, an emerging SaaS category with platforms like Reprise, Demostack, Walnut, and Demoflow, aiming to address a huge pain point for go-to-market teams.
Ometria, a London-based AI-powered customer data and marketing platform, raised $40 million in Series C funding led by InfraVia Growth, with participation from Octopus Ventures and other existing investors. It allows over 200 brands and retailers to personalize marketing messages 📱.
Knak, an Ottawa-based no-code campaign creation platform, raised $25 million in Series A funding led by Insight Partners. Knak integrates with leading marketing automation platforms and allows enterprise teams to create well-designed on-brand emails and landing pages using drag and drop functionality.
Talent Hack, a New York City-based business management platform for fitness and wellness creators, raised $17 million in Series A funding led by Emergence Capital, with participation from Global Founders Capital. It offers website management, scheduling, email automation, and payment processing so that creators can focus on their clients and classes. It charges the end-users (instead of creators) with processing fees for each session booked on the platform.
Signos, a San Francisco-based weight management platform, raised $13 million in Series A funding led by GV. Using AI-powered glucose monitoring, it aims to recommend personalized meals and exercises 🚴. It expects to launch in the US in 2022 and boasts 100,000+ people on its *weight* list.
Top Two Trends ☁️
Product Led Growth (PLG) 🔁
PLG refers to a go-to-market strategy that relies on the product as the primary vehicle to acquire, activate, and retain customers. GTM strategy refers to an action plan that specifies how a business should reach its target customers and achieve a competitive advantage. PLG companies aim to grow faster and more efficiently by leveraging their products to create a pipeline of users who then convert into paying customers 📈. The term PLG was coined by Openview Partners, an expansion-stage VC firm that believes PLG firms share the same traits:
Virality: Growth led by word-of-mouth or users spreading awareness. A great example would be Calendly 📅, where people receiving Calendly links become aware of the tool and apply to be users themselves.
Frictionless Sign-Up: PLG companies make it really easy for users to sign up for their products. This can also be a single sign-on that requests bare minimum information before users can access the product.
Deliver value quickly: Self-explanatory, implying that PLG companies deliver value to users as quickly as possible. This relies on a satisfied user telling a friend about the product and creating a viral loop 🗣️.
Value before money: Most PLG companies offer free trials or freemium plans so users can receive value before paying. Users are more willing to pay and tell others once they realize the benefit of using the product.
End-user focus: Several PLG companies take a bottom-up distribution approach. The consumerization of SaaS has led to the shift of power from the buyer (customer) to the end-user that actually uses the product.
Impact of Artificial Intelligence (AI) on SaaS 🤖
In the past few years, a lot of SaaS businesses have leveraged AI to add features and capabilities such as automation, personalization, and security, to their stack. Investors like Emergence have also developed a strong thesis around AI-powered automation and developed a strong liking for AI-enabled coaching platforms. While most people say that AI will replace countless jobs, some believe that it will deliver the most value when deployed in conjunction with human effort. AI/ML complement SaaS platforms in the following key areas:
Hyper-personalization: The ability to learn using AI and natural language processing (NLP) based on the customer’s interactions can help design user interfaces that cater to the customer and reduce complexity.
Task Automation 🛠️: AI and machine learning (ML) can replace high-volume manual processes. For instance, Chatbots can capture the most basic questions so customer agents can spend their time more efficiently.
Event Predictions: SaaS platforms can leverage AI and ML to force predictive analytics and enable triggering actions or alerts that can ultimately improve user experience and help reduce customer churn.
Search Data: Data can be used to build graphs that map questions with results/products. AI and ML are structured to continue learning, providing a better experience with more user behavior data over time.
Code Review: AI can supplement developer capabilities by creating crucial checks to scan code for errors. For instance, app development platform Docker tests and checks the code for quick implementation.
Enhanced Security 🔒: AI and ML features augment cloud-based SaaS platforms by constantly learning from and resolving new security threats.
Startup Spotlight ✨
Founded in 2013, Figma is a cloud-based design collaboration platform used by over 4 million users. It essentially helps product teams create, test, and ship better designs faster. With over 620 employees, Figma has raised ~$332 million from multiple investors, with the last funding round in June 2021 taking it to “Decacorn” status 🦄.
VC Topic of the Week 📚
Before diving into SPACs, it might be helpful to take a step back and talk about the private funding rounds like the “Family and Friends” 👪 round. Startups typically bootstrap to the extent possible before seeking outside funding to supercharge growth.
Founders need to show evidence of growth, traction, or market interest before reaching out to professional and institutional investors 💰. Thus, founders tap into their existing relationships for the first round of funding – this stage is called the Friends and Family round. It typically ranges from $10,000 to $150,000 and helps fund the first few months of operations. Most startups also label this round as a pre-seed or bridge round and generally use the raised amount to onboard the first few employees, secure office space, and acquire other essential resources for commencing operations.
This round comes with its own set of benefits and challenges. For instance, the timeline is shorter, and the transaction and legal fees are low. Managing expectations and other processes (valuation, dilution, etc.) are equally important at this stage 🙌.
However, taking money from your close ones adds to the stresses of personal relationships - you don’t want all family holidays to turn into board meetings!
Tweet of the Week 🐦
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, Ometria, Knak, Signos, Figma, Emergence, Openview, ProductLed, VentureBeat, Twitter, Giphy