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How well is SaaS overcoming the business impact of the pandemic? First, according to a new research report we published this week through theinformationsuperhighway, there are no negative impacts on the revenue of large cloud infrastructure providers that have been visible so far. While some spending may have retreated, growth through remote working and other activities has maintained overall momentum.
However, startups across the category could "consider a plan loss of around 30% in the second quarter," concludes Alex Wilhelm, based on a long interview with Mary D & # 39; Onofrio, a growth investor at Bessemer Venture Partners Category focused. “This has tempered investors' growth expectations. SaaS investors are striving not only for raw growth figures, but also for efficient growth. In Bessemer's eyes, an ARR add-to-burn ratio of 1: 1 is the goal. It will not be easy. Startups that sell to SMEs will do worse from increasing migration than startups that focus on businesses, while startups that sell to larger customers may have problems with new customers due to travel restrictions. Business-oriented startups are likely to rely more on upsells than new logos. These will also prove difficult, even if they don't slow down completely. "
She and Bessemer had already developed a number of metrics to analyze the health of cloud companies, including a cash conversion score and a Nasdaq Emerging Cloud Index. Read the rest of the article on Extra Crunch to learn how D’Onofrio sees that those numbers are now affected.
A warm farewell to Josh Constine
This newsletter focuses on important meta-topics for startups. Sometimes this means getting even more meta and talking about changes in theinformationsuperhighway. Josh Constine will leave us in the VC world, where he will invest and manage content with SignalFire.
If you ever thought Josh was the one who really got your hot new consumer goods idea first, now you have a new reason to talk to him. Read his thoughts on the new job in this personal post (and in the current newsletter).
If you're unfamiliar with the name, you've still read Josh a fair number of times during this decade if you've read theinformationsuperhighway – or technical news in general. He started writing with me here on Facebook and social trends in late 2011 and is now one of the most influential authors on social and startup topics. In addition to his traffic statistics, top journalist rankings * etc., which are the easiest to measure, we have observed that his analysis regularly leads to significant changes in the main products of leading internet consumer companies in the world.
Over the years, his repertoire has been expanded to include huge areas (such as Bing's child porn problem or Facebook's secret VPN), memes (zoom bombing) and many appearances on global stages.
He has accomplished almost everything great tech writers can do, and I can't say I'm surprised that he wanted to try investing after knowing him since our first collaboration in the past decade. I think he will be successful as an investor and will be a driving force in this role as he was here.
However, there is one thing he should still do as a professional writer – write a book. About his own life in the startup world over the past decade. Trust me, you want to read it.
* How to find other great tech reporters who report on your activities
… Besides reading this page, of course. After a series of measures, Josh was the top-ranked author at Techmeme, the news aggregator for the tech industry. Do you want to find the right reporter to talk to next to him? At Techmeme.com/lb you will find experienced theinformationsuperhighway authors and some of our most worthy competitors in 43 industry categories, including AI, e-commerce, business software and many more. (Note: This is an unpaid plug for a great independent tech media product. We don't usually do third party shoutouts here.)
We have several authors who are following the latest developments in fundraising during a pandemic. Here are notable updates from this week:
"Some of our valley colleagues have up to 40% of their businesses that need an infusion or bridge to get through," Mike Janke, co-founder of early-stage cyber security investment firm Datatribe, told Jon Shieber. "Those companies with higher valuations that came from the valley had to make drastic cuts." Startups that raised money in markets outside of the Bay Area had less trouble, he says, because they are more efficient. "If you see regions like Boston, the DC Corridor, Austin, and Boulder, these companies are not increasing the round as much and are somewhat more conservative financially."
One wonders whether these hubs will grow earlier and more comparatively than the valley itself? In the meantime, the screws continue to turn in today's term sheets.
"Let's say you were a founder and you were fine and you were on the right track and wanted to start increasing your Serie A or Serie B in May," said Freada Kapor Klein of Kapor Capital Megan Rose Dickey during an EC Live Interview on Tuesday. "Well, you're crappy. And so we see VCs sitting on the edge, waiting for the startups to go under, and then inserting the most draconian term sheet of them, where they wipe everyone off the cap table, where if you do not bet proportionately – we have one of them in progress – if you do not invest proportionately, we will lose at least 90% of our investment. "
As Alex Wilhelm noted in a separate article, investors slow down the pace of making money, even if startups can increase earnings and lower the burn rate (see first point above). Companies that should be able to raise will no longer do so on rewarding terms.
Kapor suggested that some companies want to consider wider options. For example, if a company believes it wants to lose control to investors with different motives, it may be able to re-establish itself as a nonprofit to spell out the mission and keep it (to some extent) in the charter. .
An easier answer for many startups is to drop all donation goals and focus on profitability. "Frankly, it's not rocket science," Bryce Roberts of Indie.vc Megan said in an interview. "Profitability is not this crazy, elusive thing. It is literally easier to achieve than a Series A round. It is far more achievable than a Series B round. If you look at the type of waste between these rounds, it is better for most entrepreneurs to find their way to profitability and scalability. "Instead, Roberts reminds us that you don't need permission from a startup to find out how to do it like countless great founders before you.
Immigration to the USA still possible
Resident immigration attorney Sophie Alcorn routinely performs questions and answers for us and answers readers' questions about the US trial. A single "scientist in South San Francisco" asked her what effects a recent attempt to expose green cards in a theinformationsuperhighway column this week had. We highlight the answer because we know that the scientist is far from being alone:
"The proclamation that President Trump signed last Wednesday falls far short of the total suspension of immigration that he tweeted about on Monday. The regulation provides for a very limited 60-day moratorium on issuing green cards to people wishing to travel to the United States from abroad. This “temporary suspension” has already started to protect job opportunities for unemployed Americans and to relieve the US embassies and consulates from the workload of processing green cards. It is possible that it will be extended beyond 60 days.
What this new directive actually means is that candidates who live outside the United States will not be issued employment or family-related green cards, with the exception of spouses and dependent children of American citizens, doctors, nurses, or other healthcare professionals who are among those USA is coming to USA to do research or fight COVID-19 over the next few months. "
In this Extra Crunch column, she breaks down immigration issues in combination with PPP loans for those facing such complexities.
Hopefully this country will definitely be a place for people to move again soon.
VCs talk about startups while playing during the pandemic
In our investor surveys this week, media analyst Eric Peckham caught top investors in the gaming space. This is part of an ongoing series that he's been running since last year. This time, however, he spoke about the effects of COVID-19 on social gaming and MMOs, and separately on sport. Here is an important part of Ryann Lai from Makers Fund:
Peckham: What is different about MMO (Massively Multiplayer Online) game studios that were founded recently than three years ago? Are there any significant changes in strategies, team composition, etc.?
Lai: I like to think that every game gets more MMO-like, with consistent social profiles and deeper social interactions. The "traditional" MMOs themselves see higher and higher expectations of the players regarding visuals, narratives, social systems and accessibility (e.g. less grind, shorter sessions, crossplay, etc.).
On the supply side, we've seen continued democratization of multiplayer-centric development due to a) lower development and operational costs, and b) availability of talent and specialized backend solution providers, the smaller (both in size and size) Budget) and more distributed teams to have MMO ambitions.
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