The AI revolution is here, but are we truly grasping its full impact? While most discussions focus on model capabilities and headline breakthroughs, the real game is being played at the intersection of adoption and monetization.

A few months ago, I had the pleasure of sitting down with Michael Mansard, Principal Director of Subscription Strategy at Zuora and a seasoned advisor, for a deep-dive conversation on AI’s evolving landscape. Michael has spent years helping companies navigate the shift to the Subscription Economy, and his work with the Zuora Subscribed Instituteputs him at the forefront of AI monetization trends. Our discussion, sparked by his GenAI monetization benchmarks series, touched on critical questions:

• What AI trends are flying under the radar but will define the next five years?
• How should companies rethink pricing models for GenAI?
• Why are so many AI startups struggling to monetize their innovations?
• What’s the key to scaling AI beyond early adopters?

We covered everything from the hidden infrastructure challenges of AI to the rise of outcome-based pricing models, the traps of premature monetization, and the battle between horizontal and vertical AI strategies. The insights from this conversation are as relevant today as they were when we first spoke — perhaps even more so given the market shifts we’ve seen since.

This is more than just a retrospective on AI trends; it’s a roadmap for what’s coming next. Let’s dive in.

1. AI trends TODAY and TOMORROW

Michael: Sebastien, you’ve backed over 30 startups across AI, SaaS, fintech, and climate tech, with investments ranging from seed to Series B. In just the past two years, you’ve funded over 10 companies, including Pretto, Formality, and Jimmy Energy. Your hands-on experience with founders and scaling companies gives you a unique perspective on the evolution of AI and SaaS.

Beyond investing, you’re also a recognized thought leader in the European SaaS ecosystem. Back in 2020, you launched the Serena European SaaS Benchmark to address the lack of European-specific insights, and it quickly became a must-have resource, with over 10,000 downloads annually. At Zuora, we were part of your 2023 edition alongside 700 companies and major contributors like Battery Ventures, Contentsquare, Doctolib, and OpenView. The upcoming 2025 edition is shaping up to be the ultimate playbook for scaling SaaS businesses, with a strong focus on AI.

With all of this in mind, you have a front-row seat to where AI is really making an impact. What’s something AI-related that no one is talking about but you think we should be?

What’s something AI-related that no one is talking about but you think we should be?

Sebastien: One critical aspect that’s often overlooked is the impact of AI on infrastructure — particularly, the bottlenecks in hardware scalability and energy consumption. While we see tremendous advances in AI algorithms, the infrastructure that supports this growth is struggling to keep pace. As AI models grow in complexity, the demand for specialized hardware, such as GPUs and TPUs, is skyrocketing, leading to supply chain constraints and rising energy costs. This infrastructure challenge will become a significant hurdle for scaling AI applications unless we address it with innovations in hardware efficiency and energy sustainability.

Michael: What emerging trends do you foresee in the monetization of AI products and services over the next few years?

Sebastien: The future of AI monetization lies in outcome-based models, personalized pricing, and AI-as-a-service frameworks. As AI becomes more deeply integrated into business processes, companies will move beyond traditional subscription models to embrace value-driven pricing, where customers pay based on the actual business outcomes delivered by AI, such as revenue growth, efficiency gains, or customer retention. Additionally, hybrid pricing models that combine usage-based metrics with performance outcomes will allow companies to better align their revenue models with customer success.

AI is now delivered via different business models, especially: (i) copilots that help employees do their job better (supercharging them through repetitive task automation), (ii) agents that fully automate workflows and replace the user, and (iii) AI-enabled services that automate people-intensive services historically outsourced to 3rd parties (with low margin and low differentiation).

2. Adoption opportunities

Michael: A recent Zuora Subscribed Institute survey indicates that while younger generations lead AI services adoption, there’s a clear opportunity to drive future adoption across all age groups. For instance, the majority of consumers surveyed (72%) said they are not using GenAI services. What are the key factors that influence the successful adoption and scaling of AI products in the market? How have you seen it change over the last year?

Sebastien: The most successful AI products are those that integrate seamlessly into human workflows and amplify the potential of people, not just machines. Trust, transparency, and simplicity have emerged as critical factors in the past year. As AI becomes more explainable, people feel empowered to embrace it. The shift I’ve seen is that companies now understand AI isn’t just about technology — it’s about empowering individuals to make better decisions, faster. The products that win are the ones that quietly transform lives without overwhelming users.

3. Balancing the cost, adoption, value “trichotomy”

Michael: a recent research I led has demonstrated that most SaaS companies are missing the opportunity to monetize GenAI. However, for companies developing and launching GenAI solutions, landing on the right monetization strategy for GenAI will require an ongoing balancing exercise.How do you recommend companies endeavor to balance the initial cost barriers of AI with the need to drive adoption and deliver long-term value?

Sebastien: The key is to adopt a phased approach. Start with low-hanging fruit — implementing AI in areas where immediate, tangible value can be realized, such as automating routine tasks or enhancing customer interactions. This generates early wins and justifies the initial investment. From there, companies can reinvest those savings or efficiency gains into more complex AI initiatives. By gradually expanding AI’s role, businesses can manage upfront costs while still driving adoption and scaling long-term value.

I recommend the same approach for pricing: start with a simple pricing close to your users’ habits (often a seat-based pricing). When you demonstrate value and ROI, you can then progressively switch to a ROI approach with a pricing based on the value you deliver to the user.

Michael: Overcoming costs and achieving competitive advantage can be difficult at the lower layers of the value chain. Offers in the top layers of the value chain, i.e. applications, are often in a more comfortable position to capture a value premium. What are some strategies to help companies identify and capture this value premium?

Sebastien: To capture a value premium, companies must focus on creating differentiated AI solutions tailored to specific industry needs. In the lower layers, the challenge is commoditization, so the ability to innovate around infrastructure, data optimization, or model efficiency can offer a competitive edge. In the application layer, personalization is the key to capturing value. By leveraging AI to create highly customized solutions, whether it’s predictive analytics, customer service enhancements, or industry-specific tools, companies can command a premium by delivering unique, outcome-based value.

4. Monetization strategies

Michael: In 2024, Over 3 in 4 SaaS companies had launched or were currently developing a GenAI offering but only about 15% had started monetizing their solution. What do you think of this number and why do you think this is the case?

Sebastien: This number reflects the early stage of GenAI adoption. Many companies have rushed to develop GenAI solutions without a clear strategy for integrating them into their existing offerings or demonstrating tangible ROI to their customers. The challenge isn’t just about building the technology — it’s about educating the market, identifying the right use cases, and ensuring alignment with real business outcomes.

Another key factor is market skepticism. Many customers are still unsure about the real value GenAI delivers compared to traditional solutions, and large enterprises, in particular, are cautious about committing significant budgets to these new technologies. This hesitation slows adoption and, consequently, monetization.

Lastly, the right monetization model remains a work in progress. Many companies are still experimenting with different approaches — premium features, usage-based pricing, upselling within existing products — without a clear industry standard emerging. Until they crack this, it’s no surprise that actual revenue generation lags behind the hype around GenAI adoption.

Michael: What are some common roadblocks you’ve seen them come up against? Are you finding that they have the tools/tech to accomplish this?

Sebastien: One of the most common roadblocks SaaS companies face when trying to monetize GenAI solutions is clearly articulating the value of the AI to their customers. GenAI is often seen as a black box, and while companies may build impressive models, they struggle to show how these models translate into tangible, measurable outcomes for their users. Customers need to see a clear ROI, and when that connection isn’t immediately obvious, adoption — and by extension, monetization — stalls.

Another hurdle is that many companies treat GenAI as an add-on feature, rather than a core part of the value proposition. To successfully monetize GenAI, companies need to integrate AI deeply into their offering, making it a fundamental part of how they deliver value, rather than just a shiny, optional feature. This often requires a shift in mindset and a rethink of how the product is positioned in the market.

Additionally, data access and quality remain significant challenges. GenAI thrives on large, high-quality datasets, but many companies don’t have the data infrastructure or governance in place to harness this potential. Even when they do, it’s not always clear how to optimize their models for the business-specific use cases that matter most. AI isn’t one-size-fits-all, and tailoring it to individual business needs can be technically and operationally challenging.

Finally, companies often struggle with the sequencing of product development and monetization. They may rush to build AI capabilities without ensuring they first have a proper understanding of how the technology can best serve their customer base. In many cases, they lack the internal expertise to effectively operationalize AI — this includes both the technical talent to build the AI and the commercial expertise to position it for customers.

As for the tools and technology, the answer is more nuanced. While the technical infrastructure for GenAI has matured significantly, with cloud platforms, open-source tools, and pre-trained models now readily available, the challenge lies in aligning these tools with specific business needs. Many companies have the basic technology, but the real bottleneck is how to apply it effectively and ensure that it delivers measurable, scalable outcomes.

In short, the tools are largely there, but what’s missing is the strategic approach to AI: defining the right use cases, educating the market, and building a clear path from technology to ROI. Companies that can crack this will be the ones that succeed in moving from AI development to meaningful, sustainable monetization.

5. Dynamic pricing models

Michael: At this time, nearly half of all SaaS companies are predominantly charging for their AI offers using traditional input-based models (meaning user-based or seat-based). However, a growing number of companies (nearly 50%) are beginning to move towards incorporating some level of usage-based pricing as part of a hybrid model, employing metrics that align with their value driver optimized by the AI. What are your thoughts on the advantages and challenges of usage-based pricing and hybrid model for startups? SaaS companies?

Sebastien: Usage-based pricing is a compelling model because it aligns directly with the value a customer derives from a product. It makes a lot of sense for established SaaS companies where the relationship between usage and outcomes is clear. However, for startups, it’s crucial to understand that the first priority is to demonstrate product-market fit. In the early days, you want to maximize usage, gather deep insights into user behavior, and refine the product based on real-world feedback. If you implement usage-based pricing too soon, you risk creating a barrier to adoption, customers may hold back on fully engaging with your product for economic reasons, limiting your ability to uncover the full range of pains and use cases.

This is why it’s a question of sequencing. In the beginning, I always recommend keeping the pricing model as simple and accessible as possible. The goal is to drive engagement, not to optimize for revenue at the cost of understanding your users. Once you’ve gathered enough data, and you can accurately measure the value and ROI your product delivers, that’s when you can consider transitioning to a usage-based model. The hybrid model — a combination of user-based fees and usage-based elements, offers an ideal bridge during this transition, providing a smooth pathway from early-stage simplicity to more sophisticated, value-aligned pricing as the company and its understanding of customer needs mature.

Michael: How many companies that you work with are beginning to incorporate some level of usage metering or pricing? What factors might hold companies back from capturing and metering usage?

Sebastien: In recent years, I’ve seen a steady rise in companies exploring usage-based pricing models, especially in the context of AI-driven SaaS. I’d estimate that around 30–40% of the companies I work with are actively incorporating or experimenting with usage metering. These companies understand that as AI becomes more sophisticated, pricing based purely on the number of users or seats becomes disconnected from the true value delivered by the product. By shifting to usage-based pricing, they can better align revenue with the actual outcomes or business benefits that AI helps to create, whether that’s increased productivity, more efficient processes, or enhanced decision-making.

However, despite the growing interest, there are significant barriers that hold companies back from fully embracing this model:

• Data infrastructure and analytics: Implementing usage-based pricing requires robust infrastructure to capture, analyze, and monitor usage in real-time. Many companies simply lack the necessary data pipelines or tracking systems to accurately measure how their AI solutions are being used. This creates a technical barrier that needs substantial investment to overcome.
• Defining clear usage metrics: One of the biggest challenges is identifying which metrics should drive pricing. Unlike traditional SaaS models where the number of users or features accessed is easy to quantify, AI usage is often more abstract. Companies struggle to define which actions or outcomes should be metered and whether those metrics fairly reflect the value delivered to customers. Without clear, meaningful metrics, it’s difficult to build trust with customers and justify usage-based pricing.
• Customer education and acceptance: Moving to a usage-based model often requires educating customers about how the AI works and why usage-based pricing is in their best interest. Customers are accustomed to fixed pricing models and may resist change, particularly if they feel uncertain about how their costs could fluctuate based on usage. Transparency and clear communication about how usage ties to value are essential for overcoming this resistance.
• Predictability: Customers, especially in the enterprise space, value predictable costs. Usage-based pricing introduces variability, and customers may be hesitant to adopt a model where their costs could spike unexpectedly. This is where hybrid models — combining a base fee with a usage component — come in, allowing companies to offer some level of predictability while still capturing the value of increased usage.
• Internal resistance: For some companies, shifting to usage-based pricing can cause internal friction. Sales teams, accustomed to selling fixed-price contracts, may find it harder to sell a flexible, usage-driven model. This model can also create friction because, with usage-based pricing, sales commissions are often paid only when the customer pays, rather than at the time of contract signing. As a result, sales teams may be biased by their commission structure, preferring models that provide more immediate compensation (see the compensation playbook we published for SaaS). Additionally, pricing changes require alignment between product, finance, and customer success teams to ensure that the new model is feasible, scalable, and supported across the organization

6. Shift to outcome-based models

Michael: Although outcome-based metrics are only utilized by 6% of offers, we predict an increase in such metrics in the coming months and years, as companies continue iterating on their monetization strategies to optimize value realization. While industry-specific GenAI solutions like Harvey.ai and Hippocratic.ai don’t appear to be using outcome-based metrics at the end of 2024, there is a strong argument to be made for the growth potential of such a strategy. What are your thoughts on this and what trends, if any, have you seen related to outcome-based models. Or, what would you predict we’ll see in the coming month and years?

Sebastien: Outcome-based models have huge potential but are still in early stages due to the difficulty of measuring concrete results from AI solutions. That said, I expect a clear rise in their adoption because:

• AI maturity: As AI improves, companies will be better equipped to track outcomes and show ROI.
• Customer demand: Businesses want to pay for results, not just technology, which shifts risk to vendors and drives demand for outcome-based pricing.
• Industry-specific adoption: Sectors like healthcare or legal, with clear outcome metrics, will likely lead the charge.

In the next few years, I foresee more companies experimenting with these models, especially in specialized fields where value is easily quantifiable.

7. Making the most of the data

Michael: How important is the role of accurate data and real-time insights in implementing and adjusting AI products and monetization strategies?

Sebastien: Accurate data is the lifeblood of AI. In a world where AI is expected to anticipate needs and deliver precision at scale, real-time insights are what transform AI from a static tool into a dynamic engine of value. Every data point is a thread in a much larger tapestry that, when woven together, gives AI the ability to adapt, learn, and optimize continuously. In the context of monetization, this becomes even more powerful. With real-time data, companies can align pricing models directly with the value customers are receiving at the moment, ensuring that the perceived worth matches the actual impact. It’s this fusion of data, AI, and real-time adaptation that allows businesses to capture long-term loyalty and drive sustainable growth.

Michael: How should companies be using the data they already have, in addition to third-party or market data, to fine tune their product and their monetization strategies?

Sebastien: Companies often sit on a goldmine of untapped insights within their own data. The challenge is not just collecting it but extracting its true value. Internal data should be used to uncover behavioral patterns, reveal hidden frictions, and identify key usage drivers that inform product development. It’s about going beyond surface-level metrics and delving into the deeper connections that show how, why, and where users are deriving value.

When combined with third-party or market data, companies gain a broader perspective, they see how their product fits into the larger ecosystem, where they stand against competitors, and how evolving market trends might shift customer expectations. This holistic view allows for surgical precision in not only refining the product itself but also tailoring monetization strategies to align with both customer needs and market dynamics. It’s a balancing act of being deeply customer-centric while staying in tune with the forces shaping the industry. This approach turns data into a strategic compass for driving product and financial success.

8. Shifting customer preferences

Michael: A recent Subscribed Institute research has found that 80% of consumers want more flexible buying options. Along with this, consumers and IT buyers alike are reporting a preference for usage-based pricing at higher rates. This means that monetization models are only going to need to get richer, more complex, and more personalized. Given the increased demand for personalized and flexible services, how do you advise Serena’s portfolio companies to adapt their product offerings to meet these evolving customer needs?

Sebastien: When advising Serena’s portfolio companies, it’s essential to emphasize the importance of sequencing. At the early stage of investment, many of the companies are still validating or just starting to demonstrate product-market fit. At this point, the primary focus should be on achieving deep product-market fit, not immediately on fine-tuning monetization or complex pricing models. The initial objective is to understand the core value your product brings to users and iterate based on that learning.

That said, it’s also critical to design the product and its monetization with flexibility in mind so that, once product-market fit is achieved, the company can quickly adapt its pricing strategy to align with evolving customer demands. Early on, it’s less about locking down the perfect pricing model and more about ensuring the infrastructure is there to evolve and respond to feedback.

The choice of monetization model also heavily depends on the target customer segment. For instance, enterprise customers often prioritize cost visibility and predictability. They want clear structures without surprises, which can make pure usage-based models less attractive for them.

Once ROI is clearly demonstrated, particularly in the enterprise segment, companies can explore more sophisticated pricing models like usage-based or hybrid approaches. A hybrid model, combining a predictable base cost with a usage-based component, serves as a transition tool. It allows enterprises to maintain cost visibility while still aligning with the value they derive from increased usage of the product.

Michael: In light of today’s market and going back to the trends we talked about in the beginning, can you discuss the importance of having a flexible and adaptable monetization strategy in today’s market?

Sebastien: A flexible and adaptable monetization strategy is essential in today’s dynamic market, where customer needs and technological advancements are constantly evolving. Early on, the pricing should be as simple as possible. This allows companies to focus on product-market fit and driving adoption without complicating the buying process or creating barriers for customers. Simplicity helps in quickly demonstrating the value of the product and reducing friction in initial sales.

However, as the business grows and begins to serve multiple customer segments, the monetization strategy must evolve accordingly. Different customer types, such as enterprises versus SMBs, have varying expectations and needs when it comes to pricing. As the company matures, the pricing should become more tailored to these segments, adapting to the specific value each customer group derives from the product. For example, enterprise clients may appreciate the predictability of fixed pricing early on, but as they realize more value, they might be open to hybrid or usage-based models that align costs more closely with outcomes. Meanwhile, smaller businesses often prefer more flexible pricing that scales with their growth.

Ultimately, a successful monetization strategy should align with the value the product delivers to customers, adapting over time as the business expands and targets diverse customer segments. This ensures that pricing supports both customer satisfaction and the company’s growth objectives, leading to sustained revenue and deeper customer relationships.

9. Net Retention Rate

Michael: It doesn’t seem that GenAI companies have yet fully leveraged this, while offer packaging and metrics specifically will be key levers. For example, we found that >80% of the fastest growing subscription companies have a NRR >100% and discussed this together in Serena’s European 2023 SaaS Benchmark. What are your thoughts on this? Do your observations align with this?

Sebastien: Net Revenue Retention is a crucial growth metric, yet many GenAI companies haven’t fully leveraged it. NRR measures how much revenue a company retains and expands from its existing customers, and top-performing enterprise software companies often achieve NRR above 120%. This means that for every $1 acquired from an existing customer, it becomes $1.20 the following year through upsells, cross-sells, or increased usage. In essence, with an NRR of 120%, a company can double its Annual Recurring Revenue in just five years without acquiring a single new customer, showcasing deep customer engagement and value realization.

The impact of NRR on a business is significant. A high NRR indicates that the company is growing revenue from its existing customer base, reducing reliance on new customer acquisition. This leads to predictable revenue, and higher customer lifetime value (CLTV), making the business more scalable and efficient. For GenAI companies, NRR is particularly important as the AI’s value tends to compound over time, allowing them to capture increasing value from customers as they realize more benefits.

However, prioritizing NRR becomes especially critical once a company reaches a certain level of maturity. Early on, the focus should be on product-market fit and acquiring new customers. But as the company matures, increasing NRR becomes a powerful growth lever.

In terms of valuation, companies with NRR above 120% are typically valued at a premium because it signals strong customer loyalty and long-term growth potential. Investors view high NRR as a marker of resilience and efficiency, especially in enterprise software, where customer relationships are key.

For GenAI companies, once they reach maturity, improving NRR through refined pricing, packaging, and a focus on customer success should be a priority. This will significantly boost both business performance and company valuation, putting them on par with the top-performing enterprise software companies.

10. Vertical vs. Horizontal SaaS

Michael: We spoke on this briefly before, but wanted to give you an opportunity to elaborate a bit more. Can you tell us about the challenges and opportunities within each of these spaces in relation to AI offerings?

Sebastien: The distinction between horizontal vs vertical SaaS is particularly relevant in the AI landscape, and at Serena, we are convinced that there are two types of major opportunities: models built around horizontal platforms and application layers verticalized by industry.

While the most highly valued AI companies (like Hugging Face, Perplexity, Tenstorrent, or Databricks) have largely pursued horizontal strategies, offering solutions that scale across multiple industries, there’s today significant potential and value in verticalized approaches. By focusing on a specific industry, startups can tailor their AI offerings to address niche, industry-specific challenges, creating solutions that are not just “10x better” (as is often the goal in traditional SaaS) but potentially “100x better”, thanks to AI’s ability to revolutionize processes and experiences in profound ways.

For startups, one of the keys to success is prioritizing industries using a simple but powerful framework: target sectors with high volumes of unstructured data, many low-value manual tasks, and low-velocity markets, where the slow pace of incumbents presents an opportunity for faster, more agile competitors. This combination is often found in industries like healthcare, legal, construction, and education, where data is abundant, tasks are repetitive, and innovation is slow.

But beyond technology, one of the most powerful advantages AI startups have is the ability to innovate on business models, which is crucial in competing against incumbents. Startups that don’t just replicate existing solutions but also challenge the business model assumptions of legacy players can unlock significant advantages. For example, in the search industry, Google’s business model is heavily dependent on promoting pages and generating ad clicks. A format like ChatGPT, which reduces the number of clicks by providing direct answers, poses a threat to Google’s model because replicating this approach undermines their existing incentive structure. This shows that incumbents are often constrained by their own business models, and startups can exploit these limitations to win market share.

We are still in the early stages of the GenAI wave for corporates, where many companies are just beginning to allocate budgets to GenAI initiatives, typically through consulting projects aimed at testing the integration of AI into their processes. While obvious applications like customer support are starting to be integrated into recurring budgets, there are still significant reservations among enterprises regarding scaling GenAI solutions, which leaves room for new players to emerge.

The two main challenges enterprises face are:

• Data ownership and privacy: Current GenAI solutions often fall short in terms of data privacy and security, making them unsuitable for large-scale enterprise use, especially in regulated industries.
• Clear ROI measurement: While GenAI is currently seen as a source of productivity gains, for it to scale, enterprises need to see a clear impact on revenue generation, customer satisfaction, or cost reduction. Without well-defined ROI metrics, GenAI will remain experimental in many organizations.

About Serena

Serena is one of Europe’s leading venture capital funds, with 1 billion euros under management.

In February 2025, the fund was recognized among the Top 5% value-add seed investors by Dealroom.

Founded in 2008, Serena invests at early stages, from seed to series A, and supports innovative and ambitious entrepreneurs’ success to serve a better world. Born of the profound conviction that a venture capital fund should be at the service of its portfolio companies, Serena has set up the largest operational support team in Europe and the most active startup community, the Serena Squad, with more than 550 active C-levels.

Serena strongly focuses on AI, SaaS, Climate Tech, Deep Tech, and Impact. Serena has invested in more than 100 startups with several international success stories such as Dataiku, Malt, The Fork, Electra, Descartes Underwriting, Accenta, Lifen, and AramisAuto. Combating climate change, protecting biodiversity, promoting sustainability, diversity and inclusion are at the heart of Serena’s DNA.

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The Serena team is excited to share with you this content which is provided for information purposes only. It’s meant solely for non-commercial, personal use and shouldn’t be considered as the basis for any decision or action of any nature. Entrepreneurs or any other user of this study should base their decision solely on their own case analysis.

Serena is not liable and expressly declines any liability for any damages whatsoever, resulting from the use of all information provided within this document. There is no guarantee that the information contained on this page is correct, complete or up-to-date. If you notice any irregularity or erroneous information, please let us know at communication@serena.vc.

AI in 2025: Top 10 Must-Answer Questions On Scaling, Adoption & Monetization was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.

We are thrilled to announce the grand return of the VC List after several years of silence! First launched in 2016, our editions have garnered over 150,000 views and helped more than 10,000 entrepreneurs navigate the fundraising landscape. In today’s complex and uncertain economic climate, having a reliable resource is more crucial than ever.

The VC List 2024 is here to be your ultimate companion tool, offering entrepreneurs a comprehensive guide to finding the perfect venture capital firms that align with their vision and needs. Whether you’re a startup seeking your first seed investment or a growing company looking for Series B funding, this meticulously curated list simplifies your fundraising journey. Welcome back to the indispensable resource for every entrepreneur navigating the fundraising landscape.

What’s New in This Edition?

• Expanded “Vanilla VC” category: Many new players emerging in France in the last months have joined this section, including Varsity, Ovni, and Yellow, with a strong European positioning.
• 🪽 New section for Family Offices and Business Angel Clubs: Recognizing the crucial role of BAs and family offices in pre-seed and seed funding, we’ve created a dedicated section highlighting their involvement in providing financial support, business expertise, and valuable networks.
• 🏭 New section for Infrastructure funds: Two worlds are beginning to collaborate — infrastructure funds and venture capital funds are joining forces to finance and support climate-focused companies, especially those integrating technology and infrastructure.

>>>>>ACCESS TO THE 2024 ULTIMATE VC LIST RIGHT HERE <<<<
PS for investors: If you’re not mentioned in the list or if some information is incorrect, let us know right here.

Wishing you lots of success and many term sheets!

Maxime, Heba & Seb

***
About Serena

Serena is one of Europe’s leading venture capital funds, with $750m under management.
Founded in 2008, Serena invests at early stages, from seed to series A, and supports the success of innovative and ambitious entrepreneurs to service a better world. Born of the profound conviction that a venture capital fund should be at the service of its portfolio companies, Serena has set up the largest operational support team in Europe and the most active startup community, the Serena Squad, with more than 550 active C-levels.
Serena has a strong focus on AI, SaaS, Climate Tech, Digital Transformation, and Impact. Serena has invested in more than 100 startups with several international success stories such as Dataiku, Malt, The Fork, Electra, Descartes Underwriting, Accenta, Lifen, and AramisAuto. Combating climate change, protecting biodiversity, promoting sustainability, diversity and inclusion are at the heart of Serena’s DNA.

The Serena team is excited to share with you this content which is provided for information purposes only. It’s meant solely for non-commercial, personal use and shouldn’t be considered as the basis for any decision or action of any nature. Entrepreneurs or any other user of this study should base their decision solely on their own case analysis.

Serena is not liable and expressly declines any liability for any damages whatsoever, resulting from the use of all information provided within this document. There is no guarantee that the information contained on this page is correct, complete or up-to-date. If you notice any irregularity or erroneous information, please let us know at communication@serena.vc.

Nature Tech

Climate Tech

Climate Change

The Ultimate VC List 2024: Your Essential Guide to Fundraising was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.

For 3 years, we have been publishing a public benchmark of European SaaS metrics, to help entrepreneurs keep track of the data that matters most for their business including ARR by stage, YoY growth, net retention rate, and burn multiples. We engage in crowdsourcing from private SaaS companies across the continent. We compiled and anonymized this proprietary dataset, encompassing financial and operational metrics. We are thrilled to share this new edition of the European SaaS Benchmark as a companion tool for all SaaS Entrepreneurs.

This year, +700 SaaS companies contributed, which is x3 compared to our 2022’ edition. We would like to thank everyone who contributed to this report: by filling the survey, sharing it, and providing insightful interviews… So big kudos to all of you who make this work more and more complete and global each year!

Quick intro — European SaaS Benchmark in a nutshell

1. Despite a very difficult macroeconomic environment in the last quarters (covid, inflation…), SaaS remains among the most resilient business models with strong fundamentals.
2. After several years of valuing growth rate over profitability, the trend is now reversed. North star metrics in a context where companies are seeking growth at efficient (not any) cost are evolving, here is our framework: 1/ Growth rate 2/ Rule of 40 (turning into rule of 60+), 3/ Burn multiple, 4 / Net retention rate, 5/ ARR per employee.
3. Founders who consider sustainability issues in their strategic choices are found to be more resilient during crises. Corporate sustainability jobs are on the rise but there’s still work to do regarding sustainability metrics.

The future is uncertain, but there are paths to building a market-resilient SaaS able to withstand any economic volatility.

Our article focuses on the 5 metrics that allow entrepreneurs to build an efficient and sustainable SaaS company.

1/ From growth at all cost to efficient growth: doubling ARR each year is good but not enough

Growth has always been an important indicator for entrepreneurs and investors as it demonstrates their ability to validate product market fit and gain market share. We all know the famous T2D3 (i.e. achieving 100 M$ ARR in less than 5 years by tripling ARR twice and doubling 3 times post-product market fit) which is of course still relevant for entrepreneurs seeking the unicorn or centaur status.

Even if top-performing SaaS companies used to double or triple their revenue each year up to at least 10M€ of ARR, the growth rate needs to be considered as part of a broader analysis, especially when aiming for efficient growth in today’s macroeconomic context.

2/ Rule of 40 is becoming a rule of 60+

A great way to analyze its growth rate from an efficiency perspective is to take a look at the Rule of 40. The Rule of 40 evaluates a SaaS company’s financial health and growth potential and determines whether a company is investing enough in growth while still being financially secure. It states that the company’s annual growth rate added to the EBITDA margin should be equal to or greater than 40%.

In the last two editions of our European SaaS benchmark, the Rule of 40 was not really taken into account below 20 M€ of ARR.

Today, the path to profitability is back in the public markets, and we notice a strong correlation between Rule of 40+ and valuation. This market shift was very quickly reflected in the private markets, and we noticed in the 2023 edition that SaaS startups monitored the Rule of 40 earlier (from 5 M€ of ARR).

In private markets, top performers are above 40 up to 70 for best-in-class SaaS in Europe according to the data we gathered in our benchmarking.

In public markets, best-in-class SaaS companies that achieve a Rule of 40 above 40 are valued at a premium. These companies typically have a median valuation multiple of around x9.0 EV/NTM revenue. On the other hand, companies that fall below the Rule of 40 tend to have lower valuation multiple, usually around 6x (Public SaaS Comparables table by Meritech).

3/ Burn multiple, or how much € you need to burn to add a € of new ARR (hint: achieving <2x is best-in-class)

Another great metric to monitor its growth efficiency is burn multiple, which is defined as cash burned divided by net new ARR. In other words, it answers the question: how much do you need to burn to add 1€ of new ARR? For example, if you burned 1 M€ to add 0.5 M€ in new ARR, your burn multiple is 2x.

A burn multiple of greater than 1 indicates that the company is burning cash faster than it is generating revenue, the opposite means that the business is growing efficiently.

Best-in-class burn multiples vary depending on the maturity of the company. When a business is scaling, the goal is to tend to 1, i.e. each euro spent allows to acquire 1€ of recurring revenue. Top performers for 10+ M€ of ARR are below 1x.

4/ Net Retention Rate, lever to efficiently grow and get valuation premiums (hint: 120+% is best-in-class)

In the early days of a company, the ARR growth is mainly driven by new customers. The goal is to demonstrate product-market fit, attract new customers, and satisfy them, to prevent churn over time. During this period, it is important to monitor growth and churn (or gross revenue retention).

As the company is doubling down on its go-to-market, Net Retention Rate is a must-follow metric.

From our perspective, it is quite difficult to build a successful SaaS business without having high revenue retention. A major challenge for SaaS companies with more than 5M€ in ARR is to expand via upselling and cross-selling.

To illustrate revenue retention: when you achieve a 120% net revenue retention, it means that when you acquire 1€ in ARR, it will be worth 1.2€ one year later. Great lever for growth!

Strong Net Retention Rate has a significant positive impact on your CAC. For example (assuming rough estimates, not far from reality), the quota of a customer success manager is at least three times higher than a sales rep. It means that each € of ARR generated by upselling/cross-selling a customer costs 3x less than acquiring € with a new logo.

For Enterprise software, best-in-class Net Revenue Retention is over 120%.

5/ ARR per employee, a simple and actionable metric for your whole company

The cost structure of a SaaS company is mainly driven by employees — 70–80% of costs are employees. So monitoring the ARR per employee is a good indicator, and quick to check to ensure the performance of a company.

This indicator is more and more used by entrepreneurs as it is super easy to understand and to communicate about, whereas the rule of 40 or the burn multiple is more technical and complex. ARR per employee is a simple metric that can be presented as a north star metric and monitored by the whole organization.

There is not a specific figure of ARR per employee that must be achieved absolutely since to be truly relevant, one would have to compare ARR per employee with ARR per employee to be breakeven;

However, we can share some broad orders of magnitude that emerge from our survey. In the early days of a company mainly building its product and looking for product-market fit, ARR per employee < 100k€ is OK. When scaling the go-of-market and investing for growth, between 100k€ and 200 k€ is good. When it comes to achieving breakeven and/or showing a path to profitability, the threshold is between 200 and 300k€.

During the life cycle of a growing startup with intense (fundraising and) recruiting phases, the APE will evolve quickly with peaks and drops. As an example, massive sales recruitment periods may negatively impact the APE since there is often a 3–6 month ramp-up phase prior to them issuing their quotas.

In the US, the average ARR per employee was 270k$ for SaaS companies who IPOed in 2021.

6/ Sustainability, a key factor in establishing resilient companies, and while progress has been made, there is still much work ahead to be done

Founders who prioritize sustainability in their strategic decision-making are found to be more resilient during crises for several reasons:

• Sustainable practices often lead to cost savings and operational efficiencies, which can help companies weather financial hardships and pursue opportunities in new markets and new businesses.
• Companies that prioritize sustainability are often viewed more favorably by customers, employees, suppliers, and investors, which can help build long-term relationships and trust.
• It can help companies anticipate and mitigate risks related to environmental and social issues. By taking a proactive approach to sustainability, companies can build more resilient systems and operations that are better able to withstand unexpected shocks.
• Overall, those companies are more likely to have a long-term focus and a commitment to creating value for all stakeholders, which can help them weather economic volatility, emerge stronger from crises, and if we draw the line induce valuation premiums.

In today’s business landscape, companies are not faced with the decision of whether to manage their sustainability practices or not, but rather how to manage them, capture and measure the value created.

The emergence of Chief Impact Officers and dedicated teams is becoming more prevalent in scale-ups, including SaaS companies such as Doctolib or Contentsquare. However, effectively establishing a business case, instilling it into operational teams, and developing metrics to measure the impact of ESG initiatives is still a hurdle for many companies.

BONUS: SPECIAL CHEAT CODE FOR CRAFTING YOUR EQUITY STORY

Warning: In times like these, be careful not to look too much at historical data, there is now a lot of unpredictability on the market (see standard deviation in Seed and Series A as an example).

This being said, something has changed in the funding environment. Medium valuation of public SaaS companies is around 6x NTM revenue, while it was at least 20x 18 months ago.

We are back to 2019/2020 levels! Growth is no longer rewarded at any cost.

As discussed in the “Rule of 40” part, valuation premiums are no longer awarded to companies that “only” have strong growth but to companies that are also efficient. If we take the Meritech index, median multiple is around 9.4x for companies achieving over 40 for the Rule of 40 while companies <20% are valued at 3.5x in median.

If we dig into the happy few public SaaS companies that reach a multiple > 10x, they are far above the Rule of 40 achieving a Rule of 50 or 60. Let’s take Snowflake valued at 17x achieving +60% on the rule of 40.

In this uncertain environment, efficiency is also highly favored in the private markets even at very early stage. The last version of great SaaS napkin of Point Nine illustrates that 82% of investors considered capital efficiency more important in 2022 than before. Investors seek out entrepreneurs able to build sustainable businesses, which involves balancing growth and efficiency.

>>>>> DOWNLOAD THE FULL REPORT RIGHT HERE <<<<<

Take care,

Sybille & Sébastien (huge kudos to Frédéric & Heba)

***

About Serena

Founded in 2008 by entrepreneurs for entrepreneurs, Serena invests in bold ventures and provides them with an unrivaled level of expertise and operational support.

In just ten years, the firm has already contributed to the emergence of many success stories and has currently 60 handpicked startups in its portfolio such as Dataiku, Electra, Descartes, Malt, Lifen, or Pretto.

Find out more at www.serena.vc.

EUROPEAN SAAS BENCHMARK 2023 was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.

In 2020, we published the first public benchmark of SaaS metrics in Europe to help you as an entrepreneur find peer benchmarks across the metrics that matter most for SaaS companies including ARR, YoY growth, retention, and CAC payback.

We are super thrilled to launch the second edition. We knew this one would be special but we decided to keep working on it as we truly believed that — now more than never — it would be useful for every founder out there to know how to position his company in a post-COVID market.

WHAT’S NEW IN THIS EDITION?

We decided to throw the light on new topics this year that have a special meaning for us at Serena:

1. This second edition is more global; 40% of 250+ companies interviewed are international (vs. 24% in 2020)
2. As true believers in sustainability, we’ve covered ESG metrics with detailed metrics on mission-driven companies, carbon footprint, women’s employment, and ESG certifications
3. A new go-to-market category explores sales and customer success efficiency metrics as well as when European SaaS startups decide to hire their key VPs. This latter KPI is probably what still draws a line between our American fellows
4. Last but not least, we’ve investigated US expansion metrics to get a good grasp of the key drivers behind US launches, and how European startups operate in the US in the early days

If you’re in a hurry, you can download the report at the end of the article ;)

WHO WE SURVEYED

For this second edition of the European SaaS benchmark, we had the chance to discuss with more than 250 companies, among which…

A special thanks to all the participants, and kudos to our friends who shared our survey with their portfolio companies, especially Station F, eFounders, Openview, DST, Frontline, Speedinvest, Accel, Partech, Revaia, Alven.

QUICK OVERVIEW OF THE EVOLUTION OF SAAS METRICS IN 2021

2020 was a special year. So it’s quite difficult to compare metrics year over year. However, we tried to do so.

The beauty of the SaaS model, or more generally of subscription models, lies in their resilience in the event of a crisis; so even though the period was tough, it has been an opportunity to count on a recurring business.

As expected, growth rates for €1M+ in ARR SaaS startups decelerated (66% YoY in our 2021 study versus 90% in 2020 for €1–5M and respectively 32% versus 65% for €5–10M). However, companies with less than €1m in ARR have experienced stronger growth during this covid-19 period (170% growth rate in 2021 vs 150% in 2020). We have also seen many many new companies being created during this period.

As entrepreneurs and VCs did not know how long the crisis would persist, companies tried to postpone their fundraising as far as possible and extend their cash runway. To achieve this, the number one challenge was to preserve cash and reduce cash burn. When comparing 2021 and 2020 data, the burn rate has slightly decreased overall in 2020 (50k€ vs 55k€ in monthly cash burn in 2021 vs 2020 for 0–1M€ ARR companies).

To reduce their cash burn and survive the crisis, many entrepreneurs have decided to focus on retaining their customer base, not acquiring new customers. This is probably the impact of Covid-19 where one of the first recommendations was to reduce sales & marketing expenses to preserve cash.

The burn is obviously to be contextualized with the growth rate. That’s why it’s important to put the burn in perspective with the revenue it generates.

We notice that the sales & marketing budget has been significantly reduced in 2020: 18% in 2020 vs 37% in 2019 for companies between 1 and 5 m€ in ARR.

THE EUROPEAN STARTUP SCENE IS BEATING ALL-TIME FUNDING RECORDS, THE SAAS ONE DOES NOT ESCAPE THE RULE

While fundraising was on pause during the crisis, it has kicked off strongly since the beginning of this year.

Figures speak for themselves, when a European SaaS startup raised €1.0m on average at the seed stage in 2020, it raised €2.2m in 2021. Series A and Series B round followed this path as they respectively increased from €6.0m to €7.2m (+20%) and from €12.0m to €16.0m on average (+33%).

We also notice huge rounds for very early-stage companies, especially when they are founded by repeat entrepreneurs. Whereas no surveyed startup had raised more than €10m with less than €1m of ARR in 2019, 4 respondents met these criteria in 2020. Let’s take the example of sunday (not really a SaaS company) which raised €24m before the launch of their product.

0–10M€ SAAS STARTUPS RECOVER THEIR CAC PAYBACK IN LESS THAN ONE YEAR

In a SaaS company, it is really difficult to control your burn without Sales & Marketing efficiency. CAC payback is definitely a key metric to measure Sales & Marketing efficiency.

CAC payback is the rate at which the costs spent to acquire a customer are repaid by that customer, and it usually includes sales, marketing. During the CAC payback period, you are simply paying back the money you spent to acquire a customer. After this period, you start generating profit for each of your customers.

Last year, European SaaS startups reported a CAC payback of 4–12 months which sounded quite optimistic. This year, CAC payback is c. 10 months for 5–10m€ ARR startups and 18+ months for +10m€ ARR startups. In our experience, best-in-class startups reach a CAC payback of less than 12 months for less than €10m ARR, and this slowly increases overtime until 25 months for €100m ARR startups.

Again, it depends on your targeted customer segments. In fact, ARR per customer and churn are quite different depending on your targeted customer segment allowing enterprise customers to get longer CAC payback periods than SMB ones. Below are some ranges:

• For SMBs: CAC payback < 12 months
• For mid-market: CAC payback < 18 months
• For enterprise: CAC payback < 25 months

RETENTION RATE

That’s one of the new metrics that we added this year and that we look at a lot as an investor: retention rate (or churn rate depending on how you look at it).

Just as a reminder, we split Revenue Retention between Net Revenue Retention (i.e. NRR) and Gross Revenue Retention (i.e. GRR) that we define:

• the Net Revenue Retention rate as retention after considering any revenue expansion from upgrades cross-sells or upsells
• the Gross Revenue Retention rate is not including any benefits from expansion revenue (cross-sells, upsells), or price increases

In our perspective, it is quite difficult to build a successful SaaS business without having high revenue retention. A major challenge for SaaS companies with more than €5m in ARR is to expand via upselling and cross-selling.

To illustrate revenue retention: when you achieve a 120% net revenue retention, it means that when you acquire €1 in ARR, it will be worth €1.2 12 months later. Great lever for growth!

Be careful, gross and net revenue retention depend a lot of your target segment customers with SMB segments experiencing lower gross and net retention rates than enterprise segments. In that case, we recommend you to closely monitor your LTV / CAC to ensure that your unit economics remain healthy.

Hint: bottom-up go-to-market strategies and usage-based pricing have a direct impact on your net revenue retention.

GO-TO-MARKET (VPs HIRING, SALES & CUSTOMER SUCCESS EFFICIENCY METRICS)

EUROPEAN SAAS STARTUPS HIRE THEIR VPs LATER THAN THEIR US PEERS, AND THEY PROBABLY SHOULDN’T

One question that we often get asked by the founders we back at Serena is: when is the right time to hire my VP Sales, my VP Marketing, or my Talent Acquisition Manager?

It appears that European SaaS startups do these key hirings around the €1m ARR threshold on average (€0.9m for the Talent Acquisition Manage, €1.0m for the VP Sales, and €1.2m for the VP Marketing).

We often advise our portfolio companies at Serena to hire them sooner (so do our US pals at SaaStr). The right move as a SaaS founder is to hire a profile with seniority that fits the maturity of your startup.

SALES AND CUSTOMER SUCCESS EFFICIENCY METRICS

Another question we often get asked concerns efficiency metrics, and particularly sales and marketing aspects, to (1) ensure that teams are efficient enough, (2) challenge their business model and organization, and (3) build a realistic business plan.

When we look at the figures that were shared with us, it is considered best-in-class to attract more than 10 new customers/month (13% of the interviewed base). 27% generate between 5 and 10 new customers/month. It depends obviously on the size of the customers, and the sales process. That’s why it’s also worth looking at these metrics in ARR.

It is considered best-in-class to achieve more than 100k€ of ARR per month per sales rep (14% of the companies interviewed).

Again, sales efficiency metrics differ by segment. Overall, the metric to keep in mind for maintaining healthy unit economics is that a sales executive should sign 5x more revenue than what it costs.

SALES RAMP-UP PHASE

The last important metric to build a realistic bottom-up topline (i.e. from your sales team) in your budget is the ramp-up phase of a sales rep, i.e. the amount of time it takes a new sales rep to become fully productive and achieve its quota.

We often roughly model a ramp-up phase of 6 months to get an order of magnitude. It turns out that the majority (53%) of the interviewees onboard their sales in c. 6 months. 18% manage to onboard their sales in less than 2 months, which seems to be very efficient, except for the low-touchpoint models.

CUSTOMER SUCCESS EFFICIENCY METRICS

We also took a look at the customer success efficiency metrics. Below is the overview.

EXPANDING TO THE US

37% of European SaaS respondents address the US market. The city in the US that most attracts Europeans to address the US market is… New York (17% of respondents). San Francisco is in 2nd place and Boston in 3rd. NYC, SF, and Boston are still behind the remote (39% address the US market remotely).

While Silicon Valley used to be the Eldorado for European startups eyeing a US launch, we are witnessing an evolution where more and more European startups are choosing NYC to establish themselves in the US.

The main benefits of NYC compared to San Francisco for European startups are: time difference, distance, potential customers, and being culturally closer to Europe. And this ecosystem is maturing: more talents available, VC funding exploding, and an increasing number of tech giants setting up offices in NYC such as Facebook, Salesforce, Apple…

Hint 1: San Francisco remains the center of gravity of deep tech (think of Datadog or Sqreen).

Hint 2: we also see a new typology of startups emerging with a global ambition from Europe (and remaining localized in Europe).

THE SAAS ECOSYSTEM COUNTS MANY MISSION-DRIVEN COMPANIES BUT ONLY A FEW OF THEM HAVE CONFIRMED IT WITH AN ESG CERTIFICATION

Some VC funds like Obvious Ventures or 2050 have already defined and started ambitious initiatives concerning sustainability issues. Last year, we also took some time at Serena to think about what would be our own formalization of ESG principles (let me know if you’re interested in more details).

First, at a portfolio level, we developed our own sustainability score that we start implementing on the day of our investment in a new company and that we aim at updating every year. It is built around 3 pillars:

(i) We assess the company mission with several questions like the alignment between the solution the company is building and the identified need of its mission or the potential positive and negative impacts of the company’s mission on one or more Sustainable Development Goals (SDGs).

This year, 71% of the startups from our panel indicated that they had already set the mission of their company and 21% are currently setting it. It seems that this step is the first one a startup should take on the path of a becoming a more responsible company.

(ii) We assess the startup CSR internal policy with quantitative data about the employees, the governance, and the environmental footprint of the company.

This year only 13% of the surveyed SaaS startups have already assessed the carbon footprint of their company and 16% are processing it.

(iii) We score the alignment between the startup’s activity and its mission according to several criteria that we assess during the immersion performed by our Operating team just after our first investment.

Then, we added 2 mandatory audits to our pre-investment due diligence: a carbon audit and a cybersecurity one. These two analyses come with the classic financial and legal audits.

At Serena, we’ve also launched a new project around inclusion and diversity. One of the topics we’re working on — among many others — is women’s employment within startups.

This year, only 7% of the SaaS companies from our panel are made up of at least 50% of women and 25% are made up of between 40% and 50% of them.

Then at a company level, we benchmarked existing ESG certifications to decide whether we would build a detailed roadmap towards getting one of them. Among these certifications, BCorp is a well-known one with some prominent scale-ups obtaining it in 2020 such as Luko or Welcome to the Jungle.

This year, among the surveyed companies, only 6% are considering getting an ESG certification in the coming year whereas 19% already have one.

>>>>> DOWNLOAD THE FULL REPORT RIGHT HERE <<<<<

Take care,

Flo, Heba & Sébastien

***

About Serena

Founded in 2008 by entrepreneurs for entrepreneurs, Serena invests in bold ventures and provides them with an unrivaled level of expertise and operational support.

In just ten years, the firm has already contributed to the emergence of many success stories and has currently 40 handpicked startups in its portfolio such as Dataiku, Evaneos, Malt, iBanFirst, CybelAngel, or Lifen.

Find out more at www.serena.vc.

2021 EUROPEAN SAAS BENCHMARK was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.

In September 2016, we published the first-ever public list of VCs and Corporates that invest in France. Since then, our different articles have accumulated over 100k views and we shared the list with over 5.000 entrepreneurs.

We know that raising funds can be very time-consuming. For most startups, fundraising is mission-critical. Our goal with this list is to help you maximize your chances to raise, save your time, and help you target the right VCs quickly.

At Serena, we’re publishing and maintaining this list to be true to our core DNA of being not only an investor, but the provider of operational, actionable best practices to the ecosystem (see here, here, and here for other examples of our entrepreneurial content).

What’s new in this edition?

• The excel file is over. Welcome to our new platform with the option of filtering by investment stage and by type of funds (Vanilla VCs, European, US but also corporate)

• Super easy to highlight investors who have $Bn companies in their portfolio, you just have to click on the unicorn button 🦄
• For 🇪🇺 & 🇺🇸 investors, we have highlighted the people who cover France (hint: a qualified intro is always better than a cold calling message on Linkedin).

>>>>> ACCESS TO THE 2020 ULTIMATE VC LIST RIGHT HERE <<<<

PS for investors: if you‘re not mentioned in the list or if some information is not correct, let us know right here.

Lots of success and termsheets to you!

Florent, Heba, Marie & Seb

***
About Serena

Founded in 2008 by entrepreneurs for entrepreneurs, Serena invests in bold ventures and provides them with an unrivaled level of expertise and operational support.

In just ten years, the firm has already contributed to the emergence of many success stories and has currently 40 handpicked startups in its portfolio such as Dataiku, Evaneos, Malt, iBanFirst, CybelAngel, or Lifen.

Find out more at www.serena.vc.

The Serena team is excited to share with you this content which is provided for information purposes only. It’s meant solely for non-commercial, personal use and shouldn’t be considered as the basis for any decision or action of any nature. Entrepreneurs or any other user of this study should base their decision solely on their own case analysis.

Serena is not liable and expressly declines any liability for any damages whatsoever, resulting from the use of all information provided within this document. There is no guarantee that the information contained on this page is correct, complete or up-to-date. If you notice any irregularity or erroneous information, please let us know at communication@serena.vc.

THE ULTIMATE VC LIST, 2020 EDITION was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.

Last update: 26/03–3:30PM

If you’re a French startup with offices in that geography, here are some actionable measures to take as of now.

The UK government has announced a series of measures to help businesses impacted by COVID-19.

[LABOR LAWS]

• The coronavirus Job Retention Scheme. All employers, large or small, will be able to access to support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. HMRC will cover 80% of the salary of workers (up to £2500 a month) if companies kept them on their payroll, rather than lay them off. The scheme will be open for 3 months but could be extended and will be backdated to 1 March.
  Eligibility: All UK businesses are eligible.
  How to access to the scheme?
  1. Designate affected employees as ‘furloughed workers,’ and notify your employees of this change — changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  2. Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).
  HMRC are working urgently to set up a system for reimbursement. The first grants are expected to be paid within weeks. If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
• Statutory Sick Pay: The government will bring forward legislation to allow SMBs and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  Eligibility: you are eligible for the scheme if:
  - Your business is UK-based
  - Your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020
  - Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
  How to access the scheme? The scheme is under development. Further details will be provided. We’ll update document once the legislation has passed.
• Redundancy: You must give a notice period before ending a job.
  Notice Period: You must give a notice period before ending a job.
  - **At least one week’s notice if employed between one month and 2 years**
  - One week’s notice for each year if employed between 2 and 12 years
  - 12 weeks’ notice if employed for 12 years or more
  Notice Pay: in addition to the statutory redundancy pay, you must either:
  - pay your employee during the notice period
  - pay in lieu of notice to your employee based on his or her circumstances

[FINANCIAL SUPPORT]

• VAT payments: The government is deferring the next quarter of VAT payments. This is an automatic offer with no applications required. All UK businesses are eligible and they will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
• If you are a marketplace or platform working with freelancers, do note that they are eligible for Income tax payments deferral. Income tax is due on the 31 July 2020 will be deferred until the 31 January 2021.
  This is an automatic offer with no applications required.
  No penalties or interest for late payment will be charged in the deferral period.
• Support for hospitality, retail, leisure firms
  1. All business rates will be scrapped this year
  Eligibility:
  - your business is based in England
  - your business is in the retail, hospitality and/or leisure sector
  How to access the scheme: This will apply to you automatically if you are eligible.
  You can estimate the business rate here: Business rates calculator
  2. Grants of up to £25000 will be made available for business premises. The same eligibility requirements as above
• Coronavirus Business Interruption Loan Scheme: Supports SMEs by providing access to working capital (including loans, overdrafts, invoice financing and asset financing) of up to £5 million and for up to 6 years.
  The Government will pay to cover the first 12 months of interest payments and any lender charges. The government will provide an 80-per-cent guarantee to lenders on each loan (subject to a per-lender cap on receivables) to give them greater confidence in the continuation of SME financing.
  The programme is operated by commercial lenders, supported by the British Business Bank.
  Eligibility: you are eligible for the scheme if:
  - Your business is UK based, with turnover of no more than £45 million per year
  - Your business meets the other British Business Bank eligibility criteria
  How to access the scheme? The scheme is now open for applications. To apply, you should talk to your bank or one of the 40 accredited finance providers (except the British Business Bank) as soon as possible, to discuss your business plan.
• Time to pay services: All businesses in financial difficulty and with outstanding tax debts can receive assistance with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis.
  Eligibility: You are eligible if you:
  - Pay tax to the UK government
  - Have outstanding tax liabilities
  How to access the scheme? Call 0800 0159 559.
• 🆕Protection from eviction for commercial tenants: Commercial tenants who cannot pay their rent due to COVID-19 will be protected from eviction and will not lose their lease.
  Eligibility: All commercial tenants in England, Wales and Northern Ireland are eligible.
  How to access the scheme? This change will come into effect when the Coronavirus Bill is passed. No action required.

[REMOTE WORK]

Some employers (notably Sony, Barclays, Deloitte and Nike) are currently trialling full remote working of all or many staff in order to give themselves the opportunity to iron out encountered operational difficulties in advance of any enforced office closures.

• GitLab. Guide to Remote Work from an all-remote company with 1,200 employees across 65 countries.
• We compiled a comprehensive guide to remote work.
• Some official resources: The CDC has put out Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease. The World Health Organization has detailed information on its website.

[EXTERNAL COMMUNICATION]

It may be that you need at some point to communicate to your customers about the situation and/or manage cancellation requests from them, here are some useful templates in doing so:

• Forrester: Responding to Coronavirus: A Playbook for Marketing & Communications
• Sirius: Get the “B2B Crisis Preparation” Report for free
• PushkinPR: How to communicate with employees and clients about coronavirus
• Snews podcast and articles: Crisis communication during coronavirus outbreak
• Forbes: How To Handle Your Corporate Communications
• Launchmetrics: Reassurance email template to customers for SaaS companies
• SaaS email templates to manage cancellation requests from customers
• Other resources are available here.

[COMPANY POLICY]

If you have not done so yet, it is a good idea to issue a company policy on Covid-19. If you need help issuing a company policy, please take a look at sample policies by tech companies:

• Deliveroo
• Coinbase
• Workable
• Stripe
• Twitter
• Google

Ghita, Paul & Seb

The Serena team is excited to share with you this content which is provided for information purposes only. It’s meant solely for non-commercial, personal use and shouldn’t be considered as the basis for any decision or action of any nature. Entrepreneurs or any other user of this study should base their decision solely on their own case analysis.

Serena is not liable and expressly declines any liability for any damages whatsoever, resulting from the use of all information provided within this document. There is no guarantee that the information contained on this page is correct, complete or up-to-date. If you notice any irregularity or erroneous information, please let us know at communication@serena.vc.

***

About Serena

Founded in 2008 by entrepreneurs for entrepreneurs, Serena invests in bold ventures and provides them with an unrivaled level of expertise and operational support.

In just ten years, the firm has already contributed to the emergence of many success stories and has currently 40 handpicked startups in its portfolio such as Dataiku, Evaneos, Malt, iBanFirst, CybelAngel, or Lifen.

Find out more at www.serena.vc.

Last update: 10/04–10:00AM

If you’re a French startup based in the US or with offices in that geography, here are some actionable measures you can take as of now:

If you have suggestions for what to add here (please note, the list is not crowdsourced but carefully curated), please email us at paul@serena.vc & sebastien@serena.vc

[GENERAL RECOMMENDATIONS]

• Employee safety. Take proactive measures rather than reactive measures and keep everyone safe at home to limit the spread
• Headcount. Keep it low, even if you have the budget — only hire the people you absolutely need
• Compensation. Make some compensation adjustments
• Marketing expenses. Re-evaluate your marketing plan — cut on short term paid marketing and focus on long term organic marketing (SEO)
• Office-related expenses and capital expenses. Do not cash in non-essential expenses
• Cash flow management. Front-load cash flow — be prepared not to be able to raise external financing for the next 12 months
• Internal communication plan. Send a daily update note that is personal, authentic and informative
• External communication plan. Send regular updates to your customers to reassure them

[NOTABLE NEWS]

• 🆕 You can find here a summary of all the measures put in place by the government and Payroll Protection Program estimator.

[FINANCIAL SUPPORT]

Federal Government

• 🆕 The Stimulus Program (part of the CARES Act). The Payroll Protection loan program is the most material for VC-backed tech companies and is what the federal government is focused on deploying quickly. In general, the SBA will be loaning companies up to 2 months of their US payroll costs (+ other qualified expenses like Rent and 1099 independent contractor compensation) for costs being incurred as of June 2020. A significant portion (first $100k of payroll / employee) of this loan is then eligible for forgiveness. What is not forgiven will be treated as a long term 10y+ loan at a very favorable interest rates (0.5%). The NVCA has a good summary that is being regularly updated here.
  > You are encouraged to get their applications in early as soon as possible. You should be working with and applying for these loans through your primary banking relationship. E.g. SVB and Wells Fargo have established programs to be channels for these SBA loans. Loan applications will be accepted starting Friday, April 3, 2020.
  > The current program has Affiliate rules that may problematic for VC-backed companies. There are customary Protective Provisions in standard investor rights agreements that could disqualify VC-backed companies, but it is expected that all of this will get clarified and resolved. The NVCA is working on it.
  > The current SBA loan application requires a “certification” by 20%+ owners of the Company. VC funds should not be certifying these applications, as it creates undue liability and it is expected that the loan application will be revised to remove this in the next week. For these situations, it is advised companies have everything ready to apply and are coordinating with your bank, but and wait until application is updated (expected next week).
• U.S. Small Business Administration. Offers all states and territories (previously limited to designated territories) low-interest federal disaster loans (up to $2m at a 3.75% interest rate) for working capital (to pay fixed debts, payrolls, accounts payables to overcome the loss of revenue) to small businesses suffering a substantial economic injury. Find all information here and apply for such loan directly through this link. For questions, please contact 1–800–659–2955 (TTY: 1–800–877–8339) or e-mail disastercustomerservice@sba.gov.
• The Treasury Department and IRS. Announced a 3-month delay for any tax payments owed up to $1 million. You’ll still need to file your returns by April 15, 2020, but will have until July 15 to pay. This will apply to individual tax returns but should also cover many pass-through entities and small businesses. Find all the information and how to proceed here.

California

• Employment Development Department (EDD). Employers experiencing hardship as a result of COVID-19 may request up to a 60-day extension of time from the state to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. All info here.
• 🆕 Other help you should know about: > Business Taxes & Licensing Fees ━ DEFERRED The City is deferring business taxes due April 30 for businesses with up to $10M in gross receipts for nine months with no interest or penalties. The City is also deferring collection of annual small business license and permit fees for at least three months. For more information, visit this SF Treasurer & Tax Collector webpage.
• > State Payroll Taxes & Reports ━ EXTENDED The California Employment Development Division (EDD) is granting a 60-day extension to file state payroll reports and/or deposit state payroll taxes without penalty or interest for employers experiencing hardship from COVID-19. A written request for extension is required. For the most up-to-date information, visit CA EDD’s COVID-19 resource page.
• > State Income Taxes ━ EXTENDED California business and individual tax filers affected by COVID-19 now have an extra 60–90 days to file and pay state income taxes. For more information, visit the State’s Franchise Tax Board page
• > Commercial & Residential Evictions ━ PROHIBITED UNTIL 04/15 The City has ordered a moratorium prohibiting commercial and residential evictions due to nonpayment until at least April 15th. The temporary prohibition is aimed at stabilizing small- to medium-sized businesses (those with less than $25m in gross receipts) and residents impacted by COVID-19. For more information, visit the Mayor’s Press Releases here and here.
• > Commercial Lease Assistance ━ AVAILABLE The City partners with the Lawyer’s Committee for Civil Rights to help SF small businesses (“mom and pop shops”) at risk of displacement with lease review and negotiation and related services. Apply here.
• > Water Shutoffs & Late Fees ━ SUSPENDED The City has suspended water shutoffs and late fees for at least 60 days during the local COVID-19 Emergency. For information, read the Mayor’s Press Release here.
• > PG&E Electricity Shutoffs ━ SUSPENDED PG&E will not disconnect power due to non-payment until further notice and will offer flexible payment plans for those impacted by COVID-19. For more information, visit PG&E’s COVID-19 webpage.

New York

• NYC Small Business Services. Offering grants and zero-interest loans to businesses in specific categories of size and revenue impact. Businesses with fewer than 100 employees who have seen sales decrease by 25% or more will be eligible for zero-interest loans of up to $75,000 to help mitigate losses. The city is also offering small businesses with fewer than 5 employees a grant to cover 40% of payroll costs for two months to help retain employees. All info here.
• 🆕 NYC Department of Taxation and Finance. If you are a quarterly or annual sales tax vendor, and you were unable to file or pay your March 20, 2020, sales tax return due to COVID-19, you may be eligible to apply to have penalty and interest waived. To determine whether you are eligible, see N-20–1. Announcement Regarding the Abatement of Penalties and Interest for Sales and Use Tax due to the Novel Coronavirus, COVID-19. You can request such relief directly from here.

[LABOR LAWS]

Below are clarifications on the laws enforced in the context of the Covid-19 outbreak as well as actionable instructions on how to react in different situations:

• Federal. Everything you need to know — both as an employer and an employee — is in this aggregation of info by The Labor and Workforce Development Agency. In addition, is this fundamental Q&A by US law firm Akin Gump
  - 🆕 Paid sick leave. employers with <500 employees are required to provide two weeks (or 80 hours) of paid sick leave for employees who can’t work because of quarantine, have symptoms of COVID-19, are caring for someone in quarantine and/or have children in schools that have closed. (more details here)
  - 🆕 Paid family and medical leave. employers with <500 employees are required to provide up to 12 weeks of job-protected public health emergency leave, including 10 weeks of paid leave to employees who can’t work (or telework) because they are caring for their minor child. (more details here)
  - 🆕 Tax write-offs. employers who are required to provide paid leave under this Act will receive a 100% credit on their quarterly payroll taxes.
• New York. Here is a live labor law and employment update in the State of NY by law firm Manatt
• California. Here is a key resource on labor law that has been shared by the State.
  - 🆕 Work Sharing Program — alternative to layoffs that allows employers to retain their trained employees by reducing hours and wages and offsetting with up to 60% of weekly UI (unemployment insurance) benefits amount
  - 🆕 Rapid Response Program — for employers planning a closure or major layoffs, get help averting potential layoffs and immediate on-site services to assist workers facing job losses
  - California suspends 60-day WARN Act — allowing employers to perform mass layoffs, relocations or closures without 60-day prior notice

→ A number of practical webinars by leading US labor and employment lawyers have materialized in the past days (e.g. video here — 17/03) and others are coming as well (register here — 20/03)

[COMPANY POLICY]

If you have not done so yet, it is a good idea to issue a company policy on Covid-19. If you need help issuing a company policy, please take a look at sample policies by tech companies:

• Coinbase
• Workable
• Stripe
• Twitter
• Google

→ Here is an aggregation of highly actionable tips for HRs as well as several internal communication templates by SaaS company Launchmetrics.

[EXTERNAL COMMUNICATION]

It may be that you need at some point to communicate to your customers about the situation and/or manage cancellation requests from them, here are some useful templates in doing so:

• Reassurance email template to customers for SaaS companies by Launchmetrics
• Here are SaaS email templates to manage cancellation requests from customers

[REMOTE WORK]

You will likely need to come up to speed in best remote work practices. Here are some useful links:

• Guide to Remote Work from GitLab, an all-remote company with 1,200 employees across 65 countries
• Zapier has a pretty comprehensive guide to remote work
• Some official resources: The CDC has put out Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease. The World Health Organization has detailed information on its website
• 🆕 Bonus: a Home fitness list — you will find there a crowdsourced list of free workouts

Jenny, Paul & Seb

📬Don’t miss out on our latest news!📬

The Serena team is excited to share with you this content which is provided for information purposes only. It’s meant solely for non-commercial, personal use and shouldn’t be considered as the basis for any decision or action of any nature. Entrepreneurs or any other user of this study should base their decision solely on their own case analysis.

Serena is not liable and expressly declines any liability for any damages whatsoever, resulting from the use of all information provided within this document. There is no guarantee that the information contained on this page is correct, complete or up-to-date. If you notice any irregularity or erroneous information, please let us know at communication@serena.vc.

***

About Serena

Founded in 2008 by entrepreneurs for entrepreneurs, Serena invests in bold ventures and provides them with an unrivaled level of expertise and operational support.

In just ten years, the firm has already contributed to the emergence of many success stories and has currently 40 handpicked startups in its portfolio such as Dataiku, Evaneos, Malt, iBanFirst, CybelAngel, or Lifen.

Find out more at www.serena.vc.

When it comes to SaaS benchmarks, many of you may have heard about US references, especially the great Expansion SaaS Benchmark from OpenView and the KBCM Technology Group Private SaaS Company Survey, which are great but not really actionable for European startups.

That’s why we’re excited to introduce the European SaaS Benchmark. At the end of 2019, we launched a survey to build a comprehensive data set about European SaaS companies to help you find peer benchmarks across the metrics that matter most for SaaS companies including ARR, YoY growth, cash burn, and CAC payback. We gathered the results from 108 European SaaS companies ranging from pre-revenue to more than 200m€ in ARR.

HERE ARE OUR MAIN TAKEAWAYS

1. Product-led growth strategies seem to progressively come up to SaaS startups founders as a market standard for their go-to-market both for SMBs and Enterprise companies
2. SaaS startups go global from their early days, often before they reach product-market fit
3. Remote-first companies are emerging mainly to attract the best talents but it requires a strong company culture as well as the right processes and tools
4. SaaS companies tend to achieve healthy unit economics and focus on monetization even in the early days.

If you’re in a hurry, you can download the report at the end of the article ;)

WHO WE SURVEYED

For this first edition of the European SaaS Benchmark, we had the chance to discuss with more than 100 companies, among which…

REACHING THE UNICORN STATUS

You have probably heard about the T2D3 framework to reach the unicorn status, a concept from Neeraj Agrawal: he formalized that there are 7 key phases in SaaS companies’ go-to-market success, mainly centered around the T2D3 mantra.

In a few words, it means achieving more than $100M ARR in 5 years:

• Reaching product-market fit — which implies to understand clients pain and iterate quickly on the product
• Reaching $2m ARR — at this stage, first customers are mainly signed by the founders
• Tripling twice to $18m — which implies starting building a sales team including at least a VP Sales and a few sales reps
• Double three times to $144m — at this stage, the company should be valued at more than $1Bn (hint: with such growth rate, the company should be considered as a unicorn earlier).

Reaching the unicorn status following the T2D3 framework pace remains an exceptional journey. If you look closely at the companies that went public in the US in 2019, it took them 10 years in median to go from founding to IPO after having raised $270M in median.

We noticed that investors and founders tend to achieve healthy growth, meaning focusing on monetization and profitability even in the early days. Zoom is a perfect example of company that was profitable when going public in 2019, with a positive GAAP operating margin and a 9-month CAC payback.

SAAS STARTUPS GO GLOBAL FROM THEIR EARLY DAYS, OFTEN BEFORE THEIR PRODUCT-MARKET FIT

European startups are internationalizing quickly in their development: ⅓ of their customers is based outside of their home country even when they are looking for their product-market fit (< 1m€ ARR). As you would expect, larger startups (generating more than 10m€ ARR) are significantly international with ⅔ of their customers abroad, mainly in the US.

We noticed that companies that address international customers very early are often remote-first companies. Hiring internationally is made easier as the possibility to work for a company from anywhere in the world becomes increasingly mainstream. Remote counts many benefits, including attracting talents from all over the world, and creating an optimal work environment for the team, leading to a higher employees retention. However, it remains quite difficult as it requires a strong company culture as well as the right processes and tools to ensure its efficiency.

PRODUCT-LED GROWTH STRATEGIES SEEM TO PROGRESSIVELY COME UP TO SAAS STARTUPS FOUNDERS AS A MARKET STANDARD FOR THEIR GO-TO-MARKET

Considering that young SaaS companies have high growth rates and that half of their workforce is made of product and tech teams, strategies that prioritize the product development appear to founders as a market standard for their go-to-market.

Product-first companies were historically first startups targeting SMBs and mid-market customers. This strategy now also addresses SaaS companies targeting Enterprise clients. Think about Atlassian that first had a product-led DNA and that is progressively going upmarket and now shapes a sales force that addresses both SMBs and Enterprise customers. It went public in late 2015 and has had an astonishing share price growth since then leading to a 14.3x EV/REV multiple at the end of 2019. It also appears that such companies experience faster growth, higher margins, lower burn, and stronger valuation multiples.

A BETTER NPS FOR PRODUCT-DRIVEN COMPANIES

NPS is a customer satisfaction indicator that helps to gauge the satisfaction and loyalty of a company’s customers. As there is an increasing number of product-driven startups in Europe that target SMBs customers and choose a bottom-up go-to-market, the NPS is getting better.

NPS is around 50+ for SaaS startups between 1 and 10m€ ARR, versus -3 for incumbents of the bank industry (no, we’re not really comparing startups with banks but this example speaks for itself).

Only a few SaaS companies answered this question during our survey whereas NPS remains a great tool to get insightful feedback at periodic intervals, measure customers’ loyalty and constantly improve their experience.

BUILDING A SALES & MARKETING MACHINE

European SaaS startups build their sales task forces after they reach their product-market fit which usually occurs past the €1M ARR threshold. Also, Sales & Marketing spendings peak during the €1–10m ARR phase when companies build their sales process and rapidly recruit their sales and lead generation teams. Sales & Marketing becomes the biggest expense when the company reaches 5m€ ARR. Before this threshold, expenses were mainly allocated to Product and Tech. Beyond the level of Sales & Marketing expenses, it’s important to pay attention to sales efficiency (ratio between revenue and Sales expenses).

EQUITY STORY — HOW MUCH EQUITY SHOULD BE RAISED FOR EACH MILLION OF ARR?

Startups raised 3.5m€ (median) to reach between 1 and 5m€ ARR and they raised 15m€ to reach between 5 & 10m€ ARR.

Startups that raise Seed funds have around 1m€ raised in equity with a median growth rate of 200%, 6.5m€ in total in Series A with a 92% growth rate, 12m€ in total in Series B with a 50% growth rate. More than 80% generating at least 10m€ ARR raised more than 10m€.

CORPORATES & STARTUPS RELATIONSHIPS: ARE POCs BECOMING OLD-FASHIONED?

A large part of small European SaaS business is generated by non-scalable services. They also need some PoC with a few clients to reach their product-market fit. Once they’ve attained the PMF, European SaaS companies slowly build their sales machine and grow the software part of their revenue.

Pure software revenues range between 80% and 93%, even for very young startups. It’s the end of the POC mania. Startups and corporates understood that POCs are not really viable. Corporates are getting more and more mature in their relationship with startups to foster innovation. As for big groups/companies, the startup frenzy is rationalizing, they no longer see them as POC machines that could benefit from the corporate’s internal resources. They now see them as true business partners.

>>>>> DOWNLOAD THE FULL REPORT RIGHT HERE <<<<

Take care,

Flo, Heba & Sébastien

***

About Serena

Founded in 2008 by entrepreneurs for entrepreneurs, Serena invests in bold ventures and provides them with an unrivaled level of expertise and operational support.

In just ten years, the firm has already contributed to the emergence of many success stories and has currently 40 handpicked startups in its portfolio such as Dataiku, Evaneos, Malt, iBanFirst, CybelAngel, or Lifen.

Find out more at www.serena.vc.

2020 EUROPEAN SAAS BENCHMARK was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.

Free plan and budget template included

Recently, I spent time with Celia, a Marketer from a company of our portfolio, and Alex, ex growth marketing consultant at Mailjet. Celia explained to us how difficult it can be to build a marketing strategy when you’re joining an early-stage company with a strong tech/engineer DNA. This is even harder in a pre-Series A startup which does not yet have any historical data on its marketing funnel, its sales process or its customers.

That’s why we decided to build an annual marketing plan template for marketers in SaaS companies which is a step-by-step guide to structure your roadmap and make sure you meet with your goals — and your personae — within your budget and right on time.

→ This article was co-written with Célia Poncelin, Head of Marketing at Heuritech, an Artificial Intelligence for fashion and beauty.

If you’re in a hurry, you can download the spreadsheet at the end of the article ;)

1/ Define your key goals for the next 12 months

Define 3 to 5 key objectives you’d like to meet. Think big, and make sure your marketing goals are aligned with your company’s objectives.

For example:

Company goal #1: Secure our Series A fundraising
Marketing goal: Launch a new branding

Company goal #2: Launch the UK market
Marketing goal: Find prolific Marketing Qualified Leads sources

2/ Define your KPIs

Once you’re in line with your objectives, monthly KPIs must be defined. It is important to align sales’ and marketing KPIs, for instance: number of Marketing Qualified Leads (acquisition by the marketing) with Sales Qualified Leads (first meetings) and Monthly Recurring Revenue.

I would suggest having 1–3 KPIs per key objectives, no more. Measuring everything means you’re measuring nothing.

About launching the UK market, a good KPI could be to achieve 100 Marketing Qualified Leads per month on this market.

3/ Audit your acquisition channels

It is very important that you keep track of your MQL and where they come from. The goal is to analyze for the past months how much did it cost and what did/didn’t work. Don’t forget to consider the time you have spent in your calculations. You can then prioritize and decide which acquisition channel you should focus on.

Let’s take a simple example: you are acquiring 80 leads per month thanks to your referral. Out of those 80 leads, 10 are MQL, i.e. leads that match a buyer persona and an interest. If you spent 2 days per month to optimize your SEO, your cost of acquisition is equal to your time (2 days x 8 hours x 30€/hour = 480€) divided by the number of MQL (10) so your cost of acquisition is 48€.

4/ Build your global action plan

Once you are in line with your objectives and KPIs, you have to split those goals into an action plan to make sure you’re on track to achieve them daily with an owner and a timeline. Each initiative should be addressed to a dedicated persona.

Be creative and consistent when you build your global plan. Let’s take an example, to meet a goal like “launch the UK Market”:

1. Update your website
2. Produce dedicated contents that will be used during key events in the UK
3. Cover the launch by PR activities
4. Organize a launch cocktail with your existing customers, prospects and potential partners
5. Start lead generation campaigns on a consistent and properly scheduled manner.

You can organize a brainstorming session to involve the right people (sales team, product team…) in this process and find creative ways to meet your goal. The timeline helps you make sure the workload is well balanced. Focus is key. Don’t be afraid to prioritize and say no to any wonderful project if it will have no impact on your key goals.

5/ Formalize your Content Marketing plan

If Content Marketing is part of your global marketing plan, it could be great to deep dive in a detailed plan for content production.

For each kind of content (blog post, white paper, webinar…), sum up all the content you need to produce, the owner(s) and a retro-planning. You can define the KPIs to track (number of downloads for a white paper, number of reads for a blog post…) and the cost of production.

You can now do the same thing for your events, SEO, SEM, PR and referral activities (cf tabs 5 to 8 in the template)

Based on the channels you chose in the third step and your key objectives, you can now deep dive in an acquisition plan including all the channels that let you acquire customers like events, blog posts, webinars, etc.

Let’s say your leads are coming from SEO, SEM, and events. We suggest you create a detailed plan for each one.

For SEO, you will project how much traffic you expect each month. But you can also have an objective and track the position on specific keywords.

For events, you should focus on events you want to attend, speak at or have a booth.

All these detailed plans should be linked to your initial global plan with initiatives to make sure that you focus all your efforts on your key objectives.

6/ Estimate the budget and size your team

Once you have all this information, you can sum up all costs for ads, events, contents, and branding in an external cost plan per month (ie tab #10).

For achieving your goals, you need to think about the organization of your team and plan recruitments to achieve your goals. You will probably need to coordinate with freelancers, or with providers for these different plans.

Track down what can be outsourced, when you want new team members to join and how much it will cost.

7/ Validate the plan with your CEO

Once your whole plan is prepared, you will need to validate it with your CEO and your CFO. Make sure all the organization is in line with your Global Plan as there is no marketing success without full company support. Everyone in the company should understand the rationale behind each action.

Bonus: Don’t forget to track your costs and KPIs

Here is the template we built not only to prepare your marketing plan and budget but also to track your progress and your expenses.

We recommend that you create a follow-up meeting twice a month to update the KPIs between sales and marketing, also for making sure you are always on track when reaching your goals.

You’re good to go!

>>>>> The SaaS Marketing template, in an excel sheet <<<<<

You will need to fill in a short form (20 seconds tops) and we’ll send you the file immediately by email.

We sincerely hope that it will help you build your marketing plan and budget.
If that’s the case, you can thank us by sharing or ❤-ing this post ;-)

Célia, Amélie and Sébastien

***

About Serena

Serena invests, from Seed to Serie C, in bold ventures, that transform their industry, providing them on-demand expertise and support in Paris, New York, and Singapore.

Serena portfolio companies can leverage our Operating Partner model — unique in Europe — and benefit from the support of our very active C-Level community through the Serena Squad platform, open exclusively to past and present companies, each contributing to the others’ success.

Find out more at serena.vc

Structuring Your SaaS Killer Marketing Plan was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.

Template to build your cohorts included

Cohort analysis is one of the best ways to understand your customers. It’s a fantastic method to observe current customer behavior and predict how they will act in the future. This could include determining when their next order will be, how much they are worth and the potential turnover you will generate in the coming years. Because rumor has it, a well-designed cohort analysis is vital to determining your Customer Lifetime Value (aka CLV). It’s a bit like the Holy Grail: we often talk about it, but it is still hard to grasp.

That being said, it still remains a real hassle to efficiently translate raw data into a proper cohort analysis. As we love data (and are always seeking ways to better understand product usage), Eric and I got pretty passionate about cohort building and analysis. We even built an in-house tool that we’ve started to share with a few entrepreneurs who had yet to really focus on it. In the spirit that this perspective can help others in the ecosystem, we’re excited to open source our template below.

→ For those who cannot wait to get their hands dirty, we’ve attached a link to it at the end of this article ;)

Spoiler alert: we just got hunted on Product Hunt, feel free to have a look -> https://www.producthunt.com/posts/in-cohorts-we-trust

The template we share with you today focuses on consumer models and marketplaces. It has been iteratively built and tested with some of the Serena portfolio companies. Special thanks to Nicolas (Alittlemarket), Aurélien & Théo (Cheerz), Nicolas (Malt) & Alexis (Kima) for reviewing and challenging our draft.

Our aim for you is simple: less time spent on building cohorts, more time spent on segmenting, analyzing and challenging your data. Keeping in mind that no businesses and no databases are the same, you might need to make some adjustments to adapt it .

If you have any feedback or if you just want to talk about cohorts, metrics or marketplace models, feel free to get in touch with us: egossart@serena.vc / sleroy@serena.vc.

Thanks for the model, but why are cohorts so awesome? 🤩

Long story short, a cohort is a group of users or clients who have a common characteristic, oftentimes this is determined by the date of a customer’s first order but not always… (i.e. stay tuned for more on that). It is a way to look at how your customers behave and how these behaviors evolve in the long run.

Analyzing your cohorts allows you to accurately:
1. Understand your customers and how they use your product
2. Anticipate how your new customers will act and predict their behavior
3. Understand your churn according to product evolutions
4. Build your business plan for next year with informed assumptions about your new cohorts based on the evolution of your product

Cohort analysis not only gives you the means to measure how much users really love your product but also how to develop your revenue model: when you acquire a new customer, you know that, on average, he will make a 2nd order X-months later of Y-€ and a 3rdorder Z-months later…

Ultimately, cohorts are a great way to shape your future business model.

Cohorts are not just for CEOs

While cohorts are often thought to be in the monopoly of the CEO, all teams should be involved in this analysis and monitoring as it is an infinitely better way to understand your customers and their actual usage of the product.

Below we’ve added a few illustrative examples to show added values for each team.

There’s no denying that cohorts are crucial for a company at every stage: from its inception in order to understand if your product has achieved product market fit to later down the line to understand how to drastically increase your customer retention and overall revenue.

So how should I segment my cohorts?

Good question. You may have guessed it by now, but how you decide to segment your cohorts is a very important decision. Customers are often grouped according to their 1st order or 1st sign up date. Though this may be a good solution for some of you, we suggest that you don’t limit yourself. The truth is, there are many other ways to segment your cohorts.

It is actually useful to base cohorts off a smaller segment of your users. Here are some examples of the kinds of segmentation that we see most frequently:
• Per type of customer: if you have both SMBs and large corporate customers, it would be surprising that they behaved in the same way and spent the same amounts of money
• Per device: separating your customers who order on desktop vs. those who order on their mobile could be interesting
• Per country: from one country to the next, behavior can drastically vary
• Per acquisition channel: if you have customers coming from inbound and outbound channels, this will probably have an impact on the average basket and repeat. Careful, this is not interchangeable with the above segmentation “per customer type”.

A fortiori, it is worth segmenting your customers according to their usage and purchasing behavior.

Want to give it a try ?

We did our best to make it as easy as saying “Hello”. As for all metrics, we emphasize the importance of not following too many different cohorts. Before you start building your cohorts, it’s always a good idea to spend some time figuring out the right questions to answer. You can get started by using our model and adjusting it to fit your needs.

And of course, once you’ve played around a bit with your cohorts, don’t forget to think about identifying a segmentation that is most inline with your business.

>>> A SIMPLE AND STRAIGHT FORWARD MODEL TO BUILD YOUR COHORTS AND GET RID OF HASSLES <<<

Love,

Eric & Sébastien

***
About Serena

Founded in 2008 by entrepreneurs for entrepreneurs, Serena invests in bold ventures and provides them with an unrivaled level of expertise and operational support.

In just ten years, the firm has already contributed to the emergence of many success stories and has currently 40 handpicked startups in its portfolio such as Dataiku, Evaneos, Malt, iBanFirst, CybelAngel, or Lifen.

Find out more on serena.vc

*** In Cohorts We Trust *** 🐬 was originally published in Serena on Medium, where people are continuing the conversation by highlighting and responding to this story.