Evaluating Venture Capital Funds SaaS Investments Beyond the Valuation Matrix

When evaluating venture capital fund vintages, it is easy to get stuck in the valuation matrix from Series A, B, C, D etc. A more comprehensive analysis is to plot the SaaS companies venture funds invest in across Growth and Annual Recurring Revenue (ARR) by Company Age. Using the SaaS Capital research below, you can easily pinpoint where on the graph a venture capital portfolio companies are relative to  1,400 private B2B SaaS companies which make up the annual research study published in August, 2020.

It is a simple and effective way to compare a SaaS company performance without getting distracted by higher valuations, dilutions and various fund vintages invested over multiple rounds.

Evaluating General Partner performance across multiple funds to determine consistency is critical in early stage venture capital. To remove the statistical anomalies of a fund hitting it big with one investment, evaluation of subsequent vintages  is vital. This can be difficult where funds have lifecycles of 5-7 years and multiple partners move in and out of the venture capital firm.

Ensuring there is a slide in the Venture Capital Investment Presentation that breaks down IRR and, valuations of portfolio companies by partner/s leading the investment is also critical too. Many Limited Partners want to see individual partner performance versus the overall venture firm performance over multiple funds – ensuring there is a consistency or playbook by which successful returns are generated. While this is a good break out to see, it does not allow limited partners to view portfolio company performance  versus the field based on ARR and Company Age as does the SaaS Capital Matrix above.