Are there investors/VC’s that provide liquidity for SaaS founder in a Series A?

No, not at $115k MRR.

Most “traditional” Series A VCs that write $10m+ checks will provide some liquidity for founders in hot deals.  And as the deals get bigger, to $50m+, as long as the deal is hot — secondary liquidity is par for the course.  It lets the bigger VCs buy more of the company.

Earlier than this though … it’s a terrible idea.  If a founder is willing to sell some of his stock at say an $8m valuation … they can’t possibly think the company can become a unicorn.  If you did .. you’d never sell a single share at that price.  Not only share.

My rule is consider secondary liquidity in any round with a nine-figure valuation.  Below that, it’s for suckers … or for founders that aren’t totally, utterly going for it (which is OK, just, not venture-appropriate).

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What’s the best way to answer, “You should just get a job”?

I was told this once, I do remember it well.

They were right.  But …

Then I started two start-ups.  And did pretty well.

So I think the answer is … Yes.  You Are Right.  But I’m still going for it anyway.  Yes, I am crazy.  Agreed.  And no, I’m not going to get a real job if it doesn’t work out in X months.  I’m just going to make it work, period.

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What will the investor do if the money he invested in the startup is gone?

It’s OK. As long as the founders did everything they possibly could to make it work.  Everything.

There are two types of losses for VCs and professional investors:  losses than fit into your “expected loss rate” … and unexpected, and often, abnormally high losses.   The first is OK.  The second can be Game Over.

Statistically, every early-stage investor is going to see some % of her investment fail, and a large other % not really make much money.  As a true angel, your effective failure rate could be as high as 90%.  As long as there is one Uber in there — you’re doing fine :)  By contrast, late stage investors can’t really afford too much large losses at all.  Because the upside is also more bounded.

But net net in all this … investors know what they are doing.  They know the risks they are taking.

You should only feel bad if (i) if you were dishonest, or otherwise didn’t disclose key risks — you mislead the investors, such that they couldn’t 100% see the risks — or (ii) didn’t give it every ounce of your soul to make it a success.

When investors get hurt hard is when something isn’t supposed to lose money … loses a lot of money.  E.g., I write a $500k first into a start-up.  Then I put another $2m in.  Then $10m in a third round.  Then another $20m in the Series C.  Now we’re up to $32.5m.  In, say, a $250m fund — that’s a lot.  Just losing the first $500k?  Not a big deal in a $250m fund.  It’s OK.  Losing $32.5m now though — that’s a Career Ending Move.

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To prepare for an interview for an associate job in a VC firm, what would one be expected to know? What would you recommend learning about beforehand?

Most importantly — understood what the job actually is.

“Associate” can mean many different things

For example:

In a large ($X billions) VC firm, it can mean sourcing.  I.e., cold-calling.  Or if it’s a more senior role than that — managing cold-calling analysts.   Or more often, very carefully analyzing anything sourced.  This can be a pretty High IQ / quant position.

In a smaller firm, it can mean doing all the post-sourcing work.  Due diligence calls.  Follow-up.  Deal tracking and management.  Smaller firms usually have personal deal sourcing, and don’t really do out-bound.   Here a High IQ is important, but it’s a smidge less quant, and a bit higher on the people skills quotient.  The GP will want an associate founders like, or at least, will work with.

My real point is the variety here is much, much broader than you might think.  Make sure you know what the job spec really is.  And that you are actually a good fit …

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What kind of due diligence do VCs do on the founder as a person?

It varies based on stage.

The earlier the stage, and the smaller the check, the more “simplistic” the diligence usually is. What do her peers think of her?  Her accelerator?  Her earlier angel investors?  Her ex-boss, if she had any?  Especially if it’s a first-time founder, without even a real job before — there’s only so far you can go.  Key here is your personal learnings and impressions of the founders.  Really beyond that, you are just looking for any flags that come up.

Later, the bar goes up.  Background checks are more formal. VCs want to do 4-5 “on sheet” reference checks, and as many off sheet as they can.  They want to see what the VPs you’ve hired think of you.  What your customers think.  What your partners think.

Then sometimes, in M&A, it becomes the most intensive.  A public co. often really wants to know who they are buying.  This can sometimes be the most intensive team diligence of all.

So it gets more formal, and more time-intensive, as the stage and check size go up.

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What would be a good framework to model cost per lead for a B2B SaaS product with a ACV of ~25K?

Build you model, and at an ACV of $25k, you’ll probably end up with a cost per qualified lead of about $100.  Assuming a 5% close rate (which may be high), that’s a $2,000 marketing CAC.  Assuming 2%, that’s still just $5,000 on a $25k deal.

Anyhow what that is, great.  But let me add a very important nuance.  A critical one.

You have to both segment your leads.  It’s critical.  To understand what leads are free and which are paid.  And then … average the acquisition costs together.

Once you have a few million in ARR, and a mini-brand (more on that here: SaaStr | In The Early Days, You Won’t Have Enough Customers.  But Your Mini-Brand Will Come to Your Rescue. ), and a referral engine going … you’ll get more and more of your leads for “free”.  From PR, from your brand, from customers telling other customers about them.

Since you are getting some, ideally, most leads for free once the engine gets going … you can actually afford to spend a lot more on leads than you might have thought.  Because you can average the categories (free leads and paid leads).

Net net, in the end, even if your blended CAC of free and paid is pretty low — most scaling SaaS companies end up with a $1:$1 marketing:ACV spend ratio on customers acquired through paid marketing leads. They spend about $1 to get $1 in first-year contract revenue, not including sales commissions.  That’s probably much higher than you budgeted, or are spending today.  But that’s OK if say 50% or more of your leads are free …

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Friday Q&A: How To Get Press Coverage For Your Startup

Every Friday, we’re answering your questions about business, startups, customer success and more.

Happy Friday!

This week’s question comes from Rodion Telpizov, who asks:

(Note: the pitch list that Rodion is referring to is here, though it needs to be updated.)

While PR isn’t a strategy that we’re pursuing at the moment, it is something that we’ve done before, and it’s something that can be very useful for the right businesses.

The problem is that most people go about it completely wrong.

If your approach is to:

  • Write press releases and email them to a massive list of journalists, or
  • Spam writers with emails that say nothing other than “write about this”, or
  • Try to get a story written about your product “because it’s awesome”,

…then you will most likely fail at getting press coverage.

Here are a few key insights that have helped us—and many businesses—get great results pitching for press coverage:

1) Journalists Are Influencers

They’re usually regular people who get a lot of email and requests for their time and attention.

That means that a relationship-building strategy based on actually building value for them will instantly set you apart from the 99% of emailers who simply ask for free advertising.

Follow this influencer outreach strategy, and create value. Give them tips on stories that have nothing to do with your business. Give them insightful feedback on their work. Make introductions to people who you know that they would value.

When it’s time to ask for a favor, you’ll be in a much better position.

2) Align Your Goals

No journalist’s goal is to write a love letter to your business, or to give you coverage.

That’s your goal.

Most journalists have goals that are very different:

  • Create interesting, useful stories for their readers
  • Share compelling news before anyone else does
  • Drive traffic to their outlet
  • Produce great work under the deadlines given to them

Think about how you can align your goals with theirs. Your business itself isn’t interesting to anyone but you.

But maybe there’s a story you can tell that also positions your business in the right light?

With that in mind…

3) Do the Work for Them

Don’t pitch your business. Pitch a story.

The story of Groove isn’t that we’re a tool that helps businesses manage their customer service messages.

The story of Groove is that most customer service software is far too bloated, clunky and expensive, and that creates a big burden on small businesses. That burden leads to long resolution times, low team morale and frustrated customers. Groove is one way to solve that problem.

The second story is a lot more interesting than the first.

Don’t Spin Your Wheels

You’ll likely create lots of different stories before one of them sticks. Don’t pitch an angle 50 times hoping that someone will bite.

Test your approach, test your messaging and keep improving.

Eventually, you’ll win. But the most important thing to know is that getting press coverage is not a transaction where you email a reporter and get a story.

It’s a long-term strategy that, if you want to succeed at, you have to commit to.

One final caveat: press coverage is NOT the sole growth strategy to pursue for most businesses. It can help you grow if the outlet’s readership aligns well with your own market, but getting covered in the press, in many cases, will do a lot more for your ego than for your business… and that’s dangerously addicting.

That’s not to say that there’s not tremendous value potential here. Businesses that have thoughtfully-crafted, effective and consistent PR strategies can achieve great results.

But the goal should always be growth. Not coverage.

Send me weekly updates about Groove’s Friday Q&A

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Your Turn: Ask Groove Anything

I’d love for this new weekly segment to be successful, and provide a valuable repository of answers from our entire community for entrepreneurs everywhere.

To do that, I need your help.

Here’s what you can do to get involved:

  1. Ask questions. Post them in the comments of this post, or Tweet them to us at @Groove.
  2. Answer questions. Every Friday, we’ll post a new Q&A segment. If you have anything to add or share regarding any of the questions asked, jump in! Many of you are far more qualified than I to speak on some of the topics that people ask me about.

How Live Chat on Your Website Can Maximize Conversions

Live chat is the ultimate sales hack. It’s a big call, but I stand by it. The reason is simple. It’s the easiest way to bump your website conversions in real-time without split testing.

This won’t come as a surprise to many of you who have already tried live chat to increase leads (and save on customer service). But, for most of you, it didn’t work right away.

Websites like Kissmetrics and SaneBox (which trialed our service when we founded) have tried live chat, and the data was conclusive. There was no increase in conversions, and in some cases a reduction.

In this post, I’m going to deep dive into the data science and psychology of a successful live chat install, one that increases conversions.

The Theory of Chat as a Conversion Optimizer

In the past, businesses used advertising to drive customers to a phone number. Customers would engage with a sales person. Every phone call had a person on the other end.

Then the internet took off and put something called a website in the middle.

Now, all those customers see a website before they talk to a real person. We expect a website to do the heavy lifting. It’s cheaper than humans, right?

Not always. Statistics show that, on average, only 2% of website visitors convert to an enquiry or sale. There’s an argument that lots of money is being left on the table.


Non-optimized websites convert at 2%

Live chat is well positioned to be the fix. Real humans have a way of talking to the people you drive to your website.

And, with live chat, businesses won’t need to worry if they don’t have the money, time, or resources for A/B tests or a landing page designed by Oli Gardner.

In fact, you can have the world’s worst site, or even a blank website, and still convert.


Live chat can generate 4-8x more leads

When you or your team sit on live chat, you should notice that between 10 and 50% of all your website visitors engage with you.

If done correctly, typically, a third of those should become a lead or, in the case of E-Commerce / SaaS sites, buy or sign up.

Beware: Live Chat Can Sometimes Reduce Conversions

Most people make the assumption that live chat will work in all conditions. You get to talk to your customers so that’s a good thing, right?


Websites that convert well do not work well with live chat.

The psychology is simple. The visitor has likely come from Google and found their answer in 0.24 seconds. Then they hit your website, and it’s almost always going to take longer than that to find what they want.

When they see a live chat button, it’s an exciting moment. (Maybe for me, at least.)

Live chat is the path of least resistance.

But, this is not a good thing in situations where the website can outperform the live chat agent.

Take E-Commerce. Online stores are designed for buyers, and buyers are comfortable purchasing this way.

Proactive live chat can distract users away from the buying experience by seducing them into a conversation. Our research shows that a significant portion of visitors will choose chat over the prominent CTA.

And because the “add to cart” and “checkout sequence” is easier than trying to complete a transaction through a live chat agent, live chat reduces conversions.

Which Sites Work for Live Chat?

I get asked this all the time. Truth is, they all do.

But each type of site requires a different implementation.

The easiest way to prove the ROI of chat is to capture leads from the conversations. Tracking uplift in signups and sales is a little trickier.

  • If a website has a 5% or greater conversion rate, don’t use chat until you’ve mastered everything mentioned below.
  • If a website has a 2-5% conversion rate, get some data (I’ll explain shortly).
  • If a website has a conversion rate below 2%, launch chat immediately.

Get Me the Data!

On the sites that are converting well, I like to take a data-driven approach.

The homepage might have a great conversion rate, but what about the “About Us,” “Pricing,” or “Contact Us” page.

It’s possible those pages aren’t converting well.

Here’s a live chat data checklist you can use:

  1. Create a list of all the main pages on your site likely to get prospective customers.
  2. Find the conversion rate for each page, split into business hours and after hours.
  3. For each page, find the average time to enquiry or signup. For example, from the time someone hits the page, it takes, on average, 25 seconds for them to start filling out the enquiry form, which they submit by 50 seconds.

You can find this information using Google Analytics, Kissmetrics, or specialized apps like Formisimo.

Who’s Your Customer?

Before we look at how to use the data, we need to understand who the right customer is.

The idea is to move mountains in order to talk to your best prospects but not talk to time wasters at all.

Here’s your customer characteristics checklist:

Question: Which countries do your best customers come from? Which countries do the time-wasters come from?
Answer: We get this data from ChartMogul.

Question: Which pages on your site are your best prospects likely to visit? Which pages are time-wasters likely to visit?
Answer: We look at the leads generated via our platform, and we look at the page chat was initiated on.

Question: Which page on your site has access to a login/support/area where visitors can log in?
Reason for the question: You don’t want to waste resources annoying your existing customers.

Setting Up Live Chat for Conversions

Step 1 – Page Selection

Using the data above, install the live chat platform on the pages that mean the most to you.

Some chat platforms need you to install the platform on all the pages. This is to ensure that a conversation can continue if the visitor is clicking through pages.

Step 2 – Proactive Greetings

“Greetings” is industry lingo for automated chat popups. It’s a critical feature for generating leads.

With most good live chat providers, you can set triggers for proactive greetings, such as:

  • Time on website (popup after a specific time on site)
  • First-time or returning visitor
  • Current page address is “….”
  • Visited the following page(s) “…..”during this session
  • Referring website address is “….” (i.e.,,,
  • User’s country or city is “….”
  • Searched keyword is “….” (from a Google paid ad, or Bing)
  • Custom variable (via API into your CRM, software, etc.)


An example greeting we use at LeadChat

Good live chat providers let you customize the opening sentence based on the greeting. This creates a more personalized experience for your visitor.

Here’s Your Basic Greeting Setup Checklist:

  1. Have the “time on website” trigger set to “equal to or greater than the average time to completion of CTA/form.” That is, don’t distract people before you’ve given them a chance.
  2. If you don’t have a user login area on your site (i.e., no existing customers), set a greeting to returning visitors starting with “Welcome back.”
  3. If you do have a login section for existing customers, don’t show chat on any page where they can access it (unless you are providing customer support which is a totally different beast).

Step 3 – SaaS vs Leads vs Support

Different applications need different setups. Getting it wrong will cost you.

SaaS Setup

Some companies want the website to do the heavy lifting without a sales person. Think E-Commerce sites or certain SaaS sites where you can sign yourself up without requesting a demo.

If the website is converting below 2%, do this:

  1. Answer a visitor’s first question (usually a common FAQ)
  2. Ask for the visitor’s name, phone number, and email, and tell them you’ll get an expert to get in touch
  3. Point the visitor to the sign-up link and suggest they sign up
  4. Send details captured in item #2 to your CRM or marketing system and use nurture sequence to drive them back to the CTA

The idea is that you’ll still have your same conversion rate on site, plus a few more people whose concern you solved.

And you’ll also have a whole bunch of leads who wouldn’t have converted during that visit, people you didn’t know and wouldn’t easily get back.

Then let email/content/automation or a direct response from your sales team do the work.

Lead Generation Setup

Using live chat for lead generation is becoming much more common.

Here’s how to set it up:

  1. Have a FAQ or knowledgebase system that sits side-by-side with your chat console (or use a Google doc on another screen). This helps you answer visitors’ questions faster.
  2. Have an easy way to capture lead information (for example, set up a Wufoo form with fields for name, email, etc.) This ensures that you have a separate place for all your leads.
  3. During a chat conversation, don’t be afraid to control the conversation and ask for details.


An example lead generation flow we use at LeadChat

Expert Tip: I want you to imagine a scale with leads on one end and customer satisfaction (CSAT) on the other.

When a visitor comes to your site, what they’re hoping for is to have all their questions answered, instantly.

What your business wants is the largest number of leads you can capture from your traffic and a reduction in your CPL. If you are just robotic and go for the kill, you’ll get leads but tick customers off as well.

To each end, leads and CSAT are mutually exclusive.

The balance is to provide 5-7 FAQs in response to questions, and use an exit statement for anything else.

For example: “I’d love to get your question answered by one of our experts, who I’ll pass your details to ASAP.”

Customer Support Setup

Customer support is a different beast altogether.

The goal is to reduce the amount of email and phone tickets and resolve customers’ issues on the fly.

The reason support works via chat is you can have the backwards and forwards in real-time without chewing tickets and email responses, which can take days or weeks to resolve, ultimately infuriating your visitors.

From my experience, you do need dedicated agents – people who know your product inside and out.

The best way to begin is to have your sales and/or product people handle support requests for one month. Then you can create a knowledgebase of all the questions and answers and provide it to agents you hire to do your support.

How to Choose the Right Chat Software

There are a few key players:, Zopim, Olark, LivePerson, SnapEngage, and I’d throw in (because they’re free).

Here’s my list of things to look for (all of those listed above have these as far as I know):

  • Proactive greetings with customizable triggers
  • A mobile app
  • Mobile responsive chat widget for the end user

At LeadChat, we actually use the platform because it’s by far the most advanced.

LeadChat’s Top 4 Chat Tips

1. Don’t use offline chat (i.e., “Leave a message”)
It’s rude. People see chat, they expect chat. It’s not nice to trick them into an offline form. Either have chat online, or off.

We find offline message capture still distracts people from the core CTA, with the added issue that there are no agents to respond to questions.

2. Answer within 15 seconds
If you have chat, you should answer people when they ask. 15 seconds is our rule of thumb. Anything longer is unfair.

3. Chat needs to be 24/7
Your website doesn’t close, neither should your chat. After hours represents more than 60% of your week because two-thirds of the day is after hours and there are weekends. We see 50-60% of leads come through for our clients after hours. You can find chat agents on,, or specialist companies like ours –

4. Use the data
Beyond leads, you will capture amazing insights through the chat transcripts.

Here are some things to look for:

  1. Traffic insights – Are you getting poorly qualified visitors and leads?
  2. Product opportunities – Are people asking for things you don’t do? Consider offering those.
  3. Missed opportunities – Why are people asking about things you clearly offer? Maybe your website is not communicating this well enough.
  4. Top 5 FAQs –What are the most common questions? Could you fix your homepage to address these better?


Live chat is here to stay and is an amazing tool for communicating with visitors if it’s done right.

Determine why you want live chat: More leads, more conversions, or to offer customer support.

Take a data-driven approach and create a benchmark. Follow the guide above and you’re sure to get some great results.

I love seeing the proof cases, so please share your own live chat results in the comments below. I’ll respond to every one of them :)

About the Author: Gary Tramer is co-founder of LeadChat, an Australian startup that helps businesses convert 4-8x more from their existing traffic. LeadChat does this by using a combination of data science, psychology, and neurolinguistics powered by technology and an incredible real human chat team.

Building a $7 Billion Software Company: How to Scale Up | Business of Software Europe | UK Cabinet Office

We’re in the Second Machine Age, demand for software is rocketing.

Large enterprises and governments are adopting cloud, open source, SaaS platforms and bespoke agile apps. They’re trying to re-engineer processes, transform service quality and costs. There has never been a better time to grow a software business and sell to large organisations.

Companies in all industries want a ‘digital transformation’ but also have to overcome the internal barriers within their own organisations to change. Stephen, draws on his experiences working with the UK’s Government Digital Service to share lessons learnt in attempting to transform one of the largest, most IT intensive behemoths into an organisation that is, ‘Digital by Default’

How can you profit from this shift?

Slides here


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