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News, insights and updates from the team at Bloom Equity Partners
Happy Friday Founders & Friends!
We are back with another Weekly Bloom! We hope that you enjoyed last week’s newsletter on Navigating the M&A landscape.
If you are enjoying our bit-sized insights make sure to subscribe
We’re Hiring 👀
The Bloom team is growing! We’re hiring for a newly created position and team - GM of Bloom Growth, our Shared Services Studio providing tactical growth support to B2B software portfolio companies and external clients.
We are looking for an individual with 3+ years of experience in a Demand Generation role at an early stage B2B Software company, and/or experience leading digital strategy + client services at an agency working with B2B Software customers.
Application Link
What We’re Reading and Listening To…
📚 10 Lessons Learned after $5B of M&A
📚 2022 SaaS Crash
Founders guide to navigating a market downturn
As you all know, this is a turbulent time for both public and private markets. Public SaaS multiples are at pre-covid lows and turbulent times lie ahead. For a great primer on what is happening, check out the video below from David Sacks and the team at Craft Ventures. It’s well worth the watch!
Additionally, the team at A16z released their framework for helping founders navigate downturns. In this week’s Weekly Bloom, we wanted to share some insights from this well thought-out and informative guide.
Reevaluate your valuation
For a point of reference- median public software multiples have declined almost 60% from October 2021 highs.
It usually takes around 6 months for the impact in public markets to be seen in venture- so the expected downturn is somewhat unknown.
Founders must understand how much their market segment has dipped and adjust their business accordingly (cut costs, raise prices etc.).
A helpful exercise is to figure out what ARR you need to reach to get back to your last round’s valuation and plan accordingly. To do this, use the estimated change in valuation multiples from leading public companies in your space and add a growth- and efficiency-adjusted premium for your faster growth. Then use this number to calculate the ARR you need to get to. Your goal should be to hit this revenue target with at least 12 months of runway. If you can do this, you’ll be in a strong position to raise your next round of funding.
Understand your burn multiples
Burn multiples are a great metric for understanding how efficiently your business is growing.
Burn multiples should inherently decrease as a company scales, and cross the zero mark when a business becomes cash flow positive.
Build scenario plans
When capital raising becomes more uncertain in down markets, it’s important to ensure that your company is set up to succeed in different macro environments.
Having a base, best and worse case in terms of cash burn and ARR growth is recommended. This will allow you to plan ahead for your business and make adjustments accordingly (raise debt, raise a down round, etc.)
If you enjoyed these insights make sure to check out the full essay below:
📚 A Framework for Navigating Down Markets
News from the Industry: deals, deals, and more deals 💰
Multiple private equity and venture capital firms have invested in Quality Clouds
SaaS firm SirionLabs snags $85 mn in Series D led by Partners Group
Paddle raises $200m to supercharge SaaS companies' global growth
Favorites from the Ecosystem
Investors👇…..
Founders👇…..
Operators👇….
End Note 🔚
As always, if you're enjoying The Weekly Bloom, we'd love it if you shared it with a friend or two. We try to make it one of the best emails you get each week, and I hope you're enjoying it.
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About Bloom Equity Partners
Bloom Equity Partners is a lower mid-market software-focused private equity firm, leveraging deep operational and commercial experience to create enduring market value for the benefit of our investors, founders, and their companies.
Amazing to think there is a whole generation of people at work, who have never experienced a downturn before..