Category Archives: Big Data

Big Data meets Marketing Again – this time in the world of “offline” CPG

This is a guest post by my colleague Ajay on why we invested in InfoScout. See how this startup is fundamentally disrupting the market research industry via mobile.

Ajay Agarwal: Startups, SaaS, and Steelers

Today InfoScout announced the launch of their company and their analytics dashboard for Consumer Packaged Goods (CPG) marketers. Bain Capital Ventures, along with Founder Collective and Dunnhumby Ventures, led a $5M Series A funding round in the company. We are thrilled to be partnering with the InfoScout founders, Jared and Jon, along with the entire InfoScout team.

We’ve discussed in the past here and here the rise of Marketing as the next great function in enterprise technology. A new wave of startups is leveraging Big Data and cloud computing to deliver incredible power to CMOs, giving them access to real-time insights and helping them drive faster, more data-driven decisions. InfoScout is leading this trend in the CPG industry where the marketing challenge is even more acute since the CPG brands don’t’ have direct access to the customer data (this is owned by the retailers) and the customer purchases take…

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What’s Next After SaaS? Big Data Applications

This is a guest post by Ajay Agarwal, my colleague at Bain Capital Ventures, who was the Series A investor in BloomReach. That company has the kind of story that gets all of us excited to build great tech. Congrats to the team!

Today one of our portfolio companies, Bloomreach, announced a new funding round led by NEA and their partners Scott Sandell and Ravi Viswanathan. Bain Capital Ventures and Lightspeed Venture Partners also participated in the round.  We are thrilled to work with NEA and welcome them to Bloomreach.  I have known NEA for 17 years…their managing partner, Peter Barris, was on the board of Trilogy.  Peter, Scott, Ravi and the entire partnership at NEA are world-class.

I had the good fortune of meeting Raj De Datta and Ashutosh Garg, the co-founders of Bloomreach, four years ago.  At the time, it was the two of them and an idea. The founders wanted to solve the “content discovery” problem online and make sure that every web business in the world could be effectively “found” by their respective customers.   Together, we at Bain Capital Ventures and the founders spoke to over 25 CMOs to validate this opportunity – the feedback was extremely strong and helped shape the initial product vision. We subsequently led the Series A funding in March of 2009, alongside a great group of strategic angel investors.

Less than four years later, Bloomreach employs 100 people and is on path to being the fastest growing SaaS company in history.  They are one of the pioneers in the emerging Big Data Applications space: using data from inside and outside the enterprise to transform enterprise functions.  Bloomreach uses techniques such as machine learning, web crawling, and search technology to mine a massive amount of data. That data drives marketing insights, new customer traffic and most importantly, new revenue.  On average, BloomReach customers see 94% lift in non-branded, natural search traffic.

Unlike the last generation of SaaS and cloud marketing applications, Bloomreach is not a “form on top of a database” or a repository of manually entered data and workflow.  These types of sales and marketing automation solutions are necessary and important, but fail to deliver real measurable business value and ROI to the enterprise.  In contrast, Bloomreach and companies like it are helping web businesses large and small enjoy high margin revenue through an automated service and by doing so, are transforming the marketing function….which we believe is the next 10 Billion dollar opportunity in enterprise technology

Raj and Ashutosh have been outstanding founders and exemplary leaders.  They have created a company and culture that is built to last.  The last four years have been a fantastic journey.  The opportunity for Bloomreach is awesome and we look forward to deploying the new funding in relentless pursuit of our vision.

Keeping it SaaS-y: Valuations for SaaS Companies

We’re into August, which means savvy entrepreneurs are thinking about the fall… and Funding. If you’re working on a cool new Software-as-a-Service (SaaS) product, it’s a pretty special time to raise money. Check out the latest Valuations data from the folks at PWC (https://www.pwcmoneytree.com/MTP…).Bottom-line: software funding grew 36% to $1.6B in Q1 2012 vs. Q1 2011, while most other sectors shrunk.  Go get yours.

But how should you think about valuation? What is “market” for high growth SaaS companies?

Well, here’s one way to think about it:

SaaS Valuations Grouped by Growth Rate & Margin

In short, high growth (30% per year or more) and high margin (65% or more) businesses trade at a big premium. How much of a premium? 7 times your NTM (next 12 months) sales, vs. 4-5 times NTM sales for “regular” SaaS businesses.

Your business (and founder shares) could be worth 40-75% more if you are in that top right category.

Duh right?!? But it raises an important question every founder should care about – how do I get there and what are the signposts?

Some “SaaScid Tests” to live by:

All 3 tests relate to sustainable, high revenue growth:

  • If  LTV > 3X CAC, every dollar of sales & marketing spend builds  strong, sustainable revenue backlog, assuring future growth.
  • If months to recover CAC < 12, you  are capital efficient (less fundraising and dilution!) and can use your  own cashflows to fund your CAC
  • Low churn = higher starting point for next years revenue = higher growth rate

If you manage your pricing and your sales & marketing model to these benchmarks, you will enjoy strong profitability. And if you have profitability, you can pursue growth because the customer economics scale.

Oh, and if you’re hitting those benchmarks, we should talk!

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