Key Lessons for Vertical Software Startups

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Syndication Team
April 16, 2024

"Unlocking Insights: Key Lessons for Vertical Software Startups from Public Markets"

Harlem Capital has delved into the realm of vertical software as a service (vSaaS) companies and extracted invaluable lessons from the successes of publicly listed counterparts. Here are the tangible takeaways for startups aspiring to make their mark in this niche industry:

  1. Fundraising Strategy: Aim for 3-4 rounds of capital before IPO, keeping outliers in mind.

  2. Revenue Milestones: Median revenue at IPO stands at $138M, achieved over approximately 10 years. Consider this trajectory in your scaling plans.

  3. IPO Valuation: Realistically target a median fundraising per round over the average to align with the median IPO value of $789M.

  4. Enterprise Value Drivers: Profitability and diversified revenue streams significantly impact enterprise value for public companies.

  5. ARR per FTE Optimization: Prioritize optimizing Annual Recurring Revenue (ARR) per Full-Time Equivalent (FTE) as it strongly correlates with market cap and total enterprise value.

Kudos to Gabby Cazeau and Jonathan Diakanwa for their leadership in this insightful analysis. Dive into the full report for a comprehensive understanding: Link

Harlem Capital | LinkedIn

Harlem Capital | 46,255 followers on LinkedIn. Changing the face of entrepreneurship | Harlem Capital ("HCP"​) is a venture capital firm on a mission to change the face of entrepreneurship by investing in 1,000 diverse founders over the next 20 years. While we invest in founders from all backgrounds, we are committed to reserving capital for investments in minority and women founders. We invest post product, what we call EARLY Seed.

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