"achieving meaningful exits in saas" at saas north 2016

D E S I G N I N G Y O U R E X I T S T R AT E G Y : A D ATA - D R I V E N L O O K AT R E C E N T S A A S E X I T S

Private & Confidential | 2

A g e n d a

Introduction

Canadian SaaS Exit Trends

Case Studies

How to achieve your exit?

Introducing ‘Real Exits’

01

02

03

0405


I n t r o d u c t i o n

M A R K M A C L E O D

F O U N D E R & P R E S I D E N T S U R E PAT H C A P I TA L PA R T N E R S

Mark has over 14 years experience as a CFO for leading companies such as FreshBooks, Shopify, Tungle and many others. He also spent 3 years as a General Partner at Real Ventures,

Canada’s largest and most active seed stage venture fund.

He has raised hundreds of millions in capital from investors in Canada, the US and Asia. In addition, Mark has sold companies to Airbnb, Blackberry, Rackable Systems, Return Path and

others.


S u r e P a t h : O u r P u r p o s eHelping you fund, grow and exit your startup

The process of raising growth capital is very different from raising early stage capital

It is cheaper than ever to start companies, but more expensive than ever to build market leaders. If that’s your aspiration, you need growth capital

We help startups prepare for growth stage and help them raise the capital needed to become market leaders

We have sat on both sides of the table. We have funded, grown and exited many companies

We offer up that experience through ongoing coaching and mentoring.

A low touch, high impact way to help you grow

There are few credible choices for advisors to facilitate sub $100M exits. We fill that gap

We work with you to facilitate the BD and Corp Dev intros that pave the way to an eventual exit

If you decide to exit, we manage the process for you from start to finish

SurePath maximizes your optionality: We make sure you know what it takes to build a market leader and capitalize you towards that goal.

We ensure you are always in the minds of strategic buyers so that if they decide to make a move in your space, you are in the conversation. You can then decide; Keep going or exit?

Growth Funding

Strategic Guidance

Exits


S u r e P a t h & S M B

• We have been part of some the most successful SMB SaaS companies • We have deep relationships with SMB investors and buyers • SurePath is committed to becoming the leading strategic financial advisor to the global

SMB software market

Canadian SaaS Acquisition Activity


E x i t s b y T y p e

Source: pitchbook.com

7

3

13

10

7

13

7

12

9

4 3

1 1

2

4

6

8

10

12

14

2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4

Nu

me

r of D

ea

ls

Canadian SaaS Exits

Merger/Acquisition IPO


B u y e r L o c a t i o n & T y p e


USA 53%

Canada 32%

Europe 8%

Other 7%

Buyer by Geography

Public Buyers 40%

Private Buyers 60%

Buyer by Type


B u y e r sWho’s buying Canadian SaaS companies



E x i t s b y A g e


33%

22%

28%

11%

6%

Time to Exit

0 to 5 Years

6 to 10 Years

11 to 15 Years

15 to 20 Years

> 20 Years


E x i t s b y S i z e


10%

7%2%2%3%

76%

Exit Values

$0-$10M

$10-50M

$50-$100M

$100-$200M

$200M +

Non-disclosed


F u n d i n g S t a t u s


3%

55%

42%

Funding Status of Exited Companies

PE VC Non-funded

$259.4m

$33.1m $2.5m $0.0m

$50.0m

$100.0m

$150.0m

$200.0m

$250.0m

$300.0m

PE VC Non-funded

Median Valuation

4.0x

5.3x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

PE VC

Valuation /Rev Multiple


P R O V I N C E E X I T S

O N TA R I O 4 7

B R I T I S H C O L U M B I A 1 9

Q U E B E C 1 6

N O VA S C O T I A 3

A L B E R TA 2

N E W B R U N S W I C K 2

P R I N C E E D WA R D I S L A N D 1

E x i t s b y L o c a t i o n

3

19

47

116

2

2

Case Studies

Private & Confidential |

CompilrYear Founded 2010

Time To Exit 4 Years

Rounds Raised 1

Total Funding $110K

Investor(s) Seedcamp

HeadquartersHalifax,

Nova Scotia

Employees 12

15

C a s e S t u d y : C o m p i l r

Source: pitchbook.com, Entrevestor, Techcrunch, Financial Post, Techvibes

Acquired By Valuation Date Of Acquisition

$20M USD* *Estimated

Oct 2014

• Compilr tried to raise capital and was rejected by 35 VCs • They were profitability driven - focused on improving ARPU from

existing clients as opposed to growing via freemium • Acquisition allowed lynda.com to grow its reach with

developers and allowed cloud-based platform to create code • lynda.com was an inbound acquirer, reaching out in 2013 to

buy Compilr • Founders started looking for acquirers a year before acquisition • CEO Patrick Hankinson took the lynda.com offer and reached

out to every education platform competitor to shop around • After a year, lynda.com shuttered the technology and got rid of

the Compilr team, CEO regrets not digging deeper


Universe Year Founded 2011


Rounds Raised 3

Total Funding$2.2M

($250K Debt)

Investor(s) Real Ventures

Headquarters Toronto, Ontario

Employees 33

16

C a s e S t u d y : U n i v e r s e

Source: pitchbook.com, Techvibes, angel.co, hypebot


Not Disclosed June 2015

• Universe had a clear buyer from the outset - they garnered the attention of Ticketmaster when they raised their round in May 2014 and were acquired a year later

• Universe had an important differentiating factor - users did not have to travel to another website in order to buy tickets which created a better user experience

• Acquisition allowed Ticketmaster enter the DIY ticketing market

• They used an M & A advisor on the deal

• Universe is currently operating independently - they have doubled headcount and opened offices in NY and London since being acquired


Monexa ServicesYear Founded 1998


Rounds Raised 2

Total Funding $6.23M

Investor(s)Ansera Capital

Partners, PenderFund, Yaletown Partners

HeadquartersVancouver,

British Columbia

Employees 51

17

C a s e S t u d y : M o n e x a S e r v i c e s

Source: pitchbook.com, Finsmes, Newswire, BCTechnology


$33.1 Million USD August 2015

• Monexa’s subscription commerce platform allowed businesses to manage complex product and services billing requirements - capabilities that Netsuite did not have and would have been costly to build

• Monexa leveraged its market leadership to raise funding to rapidly iterate upon its existing product to be able to outcompete new SaaS companies entering the space

• Netsuite acquired Monexa because they needed an agile billing system in order to compete and their existing product was insufficient

• Netsuite retained all employees and Vancouver was made the centre of Netsuite’s subscription billing efforts

How to Achieve Your Exit


Exit Rule #1: Be proactive

stop wishing.

start doing.


Exit Rule #2: Strangers don’t (often) marry


Exit Rule #3: Timing matters

Source: SaaStr


Exit rule #4: (Almost) anything is possible

Possibilities


Buyer TypesFounder

✓ Product-driven

✓ Based on desire

✓ Top down

✓ No prior relationship needed

Manager

✓ Fact-driven

✓ Based on clear business case

✓ Pushed up to CEO

✓ Need evidence (joint customers)


Drivers of Deal Value

✓ Alternatives (runway, competition)

✓ Scarcity

✓ Mortal enemies

✓ Growth (fear)

✓ Market leadership (2 way)

✓ Does the buyer’s CEO Want this?

✓ On strategy

✓ Currency

✓ Time and timing (including markets)


T h e R o l e o f A d v i s o r s

25

✓ Should you hire one? Yes

✓ What to look for: Relevant relationships, completed deals and expertise.

Senior people involved

✓ Role:

✓ Prepare you

✓ Quarterback

✓ Create / manage demand

✓ Good cop/ bad cop

✓ Objectivity

✓ Create urgency


I n t r o d u c i n g R e a l E x i t s

Shubham Datta Associate

[email protected] 647.972.6834

Rena Wang Analyst


Mark MacLeod Founder & President


"achieving meaningful exits in saas" at saas north 2016

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