SaaS Investment Strategies

Your SaaS stack is either an appreciating asset or a monthly liability. The difference is in how you buy it. Let me explain. On the books, SaaS is almost always classified as OpEx. That’s the accounting reality. But the companies getting the most value from their stack think about SaaS like CapEx when they purchase it, with investment discipline, long-term ROI in mind, and clear ownership. When a company buys a €500k machine, it’s treated like CapEx: 👉 Business case, forecasts, ROI projections, approval gates You expect measurable value over years. But €500k/year in SaaS? Often pushed through like office supplies. 👉 No ROI model, no usage plan, no defined lifespan SaaS is infrastructure now, powering revenue, customer experience, and operations. It’s just as business-critical… except the “capital” is on autopay every month. The OpEx mindset creates three problems: ❌ Short-term focus → “This month’s bill” over “this year’s value” ❌ Weak governance → No measurement of actual ROI ❌ Reactive cuts → You trim tools too fast, then spend more later rebuilding lost capabilities and processes CapEx thinking fixes this: ✅ Build a business case for every tool ✅ Track returns and hold owners accountable ✅ Continuously reassess your stack: test new solutions, remove redundancies, and adapt contracts to usage ✅ Tie your SaaS investments to company OKRs and measurable ROI The result isn’t just lower spend, but a SaaS portfolio that compounds in value over time. CapEx or OpEx, which mindset drives your SaaS strategy?

SaaS startups Seed or Series A has changed drastically, but not the fundamentals:  Going through multiple SaaS plays recently, so decided to put this out: 1. ARR & Growth - Seed: ~$0-1.5M ARR, with early signals of repeatability. - Series A: ~$1-5M ARR, typically growing 2-3x quarter-over-quarter (though 1.5-2x can be acceptable in some cases). 2. Team - At Seed, the focus is on speed and iteration—can the team execute fast, refine based on insights, and attract key stakeholders (customers, employees, partners)? - By Series A, the expectation shifts toward building a high-caliber team, with strong individual contributors (ICs) in product, marketing, and sales. There must be a compelling reason why "THIS" team will win. 3. Product & Market Fit - Early adoption, engagement, and stickiness are critical at Seed. A credible strategy to scale into a large TAM is essential. - Series A requires clear PMF—high usage, low churn, strong NPS, and customer advocacy. The "why now" must be obvious. 4. Sales & GTM Motion - At Seed, traction often comes from founder-led sales and organic demand. - By Series A, there should be a scalable and repeatable acquisition channel beyond founder-driven efforts. 5. Capital Efficiency - Seed-stage companies must show resourcefulness—getting a lot done with a small team. - At Series A, efficiency is quantified: a burn multiple of <3-4x is a strong signal. 6. Moat & Defensibility - Early-stage investors look for increasing conviction in how a company can build a durable moat—be it proprietary data, network effects, or deep integration. 7. AI as a Strategic Lever AI comes up in nearly every VC discussion, but what matters is "How" it's applied. Key questions investors ask: - Does the team deeply understand the problem AI is solving for the customer? - Is there access to proprietary data that improves model performance? - How is AI integrated within the product to drive a sustainable advantage? - What impact does AI have on cost structure and pricing? - Is AI a true differentiator or just a commodity feature? Raising capital is not just about hitting a revenue milestone—it’s about proving 𝘳𝘦𝘱𝘦𝘢𝘵𝘢𝘣𝘪𝘭𝘪𝘵𝘺 across product, go-to-market, and team execution. For SaaS founders, the best way to de-risk a fundraise is to focus on these fundamentals early. Would love to hear —what’s been your biggest challenge you've seen in SaaS across sectors — Seed to Series A? #VentureCapital #SaaS

Every few months, someone declares SaaS dead. But the more practical question is: what are investors actually funding in SaaS today and what are they avoiding? I shared my perspective with Dominic-Madori Davis in a new TechCrunch piece. If your differentiation lives mostly in UI and automation, that's no longer enough. The barrier to entry has dropped which makes building a real moat much harder. That's why generic productivity tools, project management platforms, CRM clones, and thin AI wrappers built on top of existing APIs are finding it harder to raise funding and survive. What remains attractive? Right now, capital is moving toward businesses that control critical workflows, structured data, and real domain expertise — and away from products that can be copied without much friction. 🔵 ⁠For new founders, this means building around real workflow ownership and a clear understanding of the problem from day one. Massive codebases are no longer an advantage. What matters more is speed, focus, and the ability to adapt quickly. Pricing also needs to be flexible: rigid per-seat models will be harder to defend, while consumption-based models make more sense in this environment. We continue to invest in founders building in this new paradigm — welcome to AltaIR Capital and Pre-seed to Succeed. And through AltaLab, an acceleration program by AltaIR Capital, we work with founders to refine focus, sharpen their vision and increase their chances of raising capital. 🔵 For existing SaaS companies, brand and customer relationships are still strong advantages. But that's not enough on its own. They need to adjust how they operate, integrating AI deeply into their products, rethinking internal processes, and updating their marketing strategy and messaging. The companies that are willing to evolve are continuing to grow. The ones trying to protect old models will struggle. This conversation often drifts into "SaaS is dead". I don't see it that way (though I'd be happy to go deeper on that broader discussion around SaaSpocalypse if there's interest). What I see instead is AI raising the bar for SaaS companies. Thank you, Dominic-Madori Davis, for the thoughtful piece! Read the full article: https://lnkd.in/dW59vvWX