At MacDonald Ventures, we find and fund SaaS founders developing the next wave of world-changing technological innovation.
With a portfolio of over 100 angel investments and more than $400 million in exits of companies I’ve founded, I’m dedicated to supporting the long-term growth of innovative and disruptive early-stage SaaS startups and investing in the next generation of phenomenal founders changing the tech landscape as we know it.
Angel Funding for Your SaaS Company
When it’s time to find investors for your SaaS startup, it’s critical to understand that, outside of funds raised, not all investors offer the same value.
Some investors, particularly angel investors like myself, will be involved in the business development process. They’ll use their network and connections to open doors for you, helping pave the way to your success. They’ll utilize their own rich industry experience to guide you through your business development. Others will not – they’ll prefer to sit on the sidelines while you work through the early stages of growth.
Make sure that the angel investors you’re pursuing are ones you want with you on the ride.
If they aren’t experienced in early-stage investing or are impatient with the process of startup development, you’ll find that you’ll spend more time and energy working out investor issues than on what’s most important – building your business and positioning it for growth.
The best SaaS angel investors are those with experience with the SaaS business model, connections within the industry, and an understanding of what separates the good tech companies from the truly great ones. These investors will bolster your chances of success and see you through to the win.
SaaS Angel Investors vs. SaaS Venture Capitalist
If you’re considering raising funds for your startup through SaaS angel investors or venture capitalists, there are a few key differences you should consider regarding their money source, when they invest, and what their involvement looks like.
SaaS angel investors invest their own capital into startups, funding at earlier stages of the development process, including pre-seed and seed-stage businesses. There’s also a leaning toward tech companies and other higher-risk fields. We tend to invest with more than just our money, however, offering hands-on guidance and personal expertise to help our startups become successful.
SaaS venture capital firms, on the other hand, invest pooled money managed by specialists and typically hold out on investing until at least the Series A funding round. Finding additional involvement from a VC firm, however, is unlikely. Typically, SaaS venture capitalists prefer more of a hands-off investment with less risk. SaaS VC firms may also come with more strings attached, such as higher funding requirements like a board seat or selecting a different founder.
In general, SaaS angel investors have more freedom in selecting who to fund and they can be more open to riskier, early-stage companies, while SaaS VCs are looking for a unicorn $1 billion company with a clear path to success.
If your company is looking for an investor that can support the growth of your company both developmentally and financially through the early startup stages, SaaS angel investors will be your best fundraising source.
How to Create a Pitch Deck That Gets SaaS Funding
Once you’ve determined which investment source to focus your SaaS fundraising efforts on, it’s time to make the connection and present a pitch deck that will sell your potential investors on your world-changing solution and help them understand your vision for the future.
In any SaaS pitch deck, there are twelve key components you’ll need to include to convince a potential investor to fund your startup.
- Introduction – Keep this part short and sweet, introducing your potential investors to who you are as a company and why you’re presenting your pitch today.
- Team – Introduce the founding team behind the idea and what role they play in the development of the company.
- Your “Why” – This is the problem you’re aiming to solve or your founding story. Why is it a problem, and what would happen if it wasn’t solved?
- Competitive Advantage – This is your key differentiator. What sets you apart from the rest, and why is your solution better than anything else on the market?
- Your “How” – Your “how” should describe your solution to the problem at hand and how you make money.
- Product – Show off your prototype or a demo of your software. Your investors want to know how it works in real life.
- Traction – If you’re asking for funding, you need to be able to show some kind of measurable traction that proves a future of success for your product.
- Your “Who” – If you don’t have solid figures on your market size, at least try to predict the size of your target market.
- Competition – What other companies are in the market trying to solve the same problem? How is your solution different and better than theirs?
- Your “What” – This is your business model and should explain your plan to make revenue. Investors want a timeline of when they can expect money to start coming in.
- Investing – How much money do you need to raise, and how will that money be used?
- Contact – Finish things up with your best contact information for investors to reach you quickly.
SaaS Companies We’ve Funded
With revolutionary tech as our primary focus, MacDonald Ventures has funded several SaaS companies with online- or software-based solutions for real-life problems. Some examples include:
Finexio is a simplified Accounts Payable SaaS platform designed to optimize and monetize AP payments. Pioneering the category of “AP Payments as a Service,” this MacDonald Ventures investment and online platform is helping customers pay invoices better, faster, and cheaper with white-glove service to free up time internally.
Gecko Robotics is an RPA-meets-SaaS solution and MacDonald Ventures investment that provides robotic industrial inspections across several industries to identify common forms of degradation including erosion and corrosion. Gecko Robotics also integrates a cloud-based portal to present inspection data, calculate erosion rates, and download all reports.
Blend is a cloud-based platform that powers the end-to-end customer banking experience, empowering banks to process an average of $5 billion in transactions each day. This MacDonald Ventures investment aims to make processes like opening an account or getting a loan simpler, more secure, and more efficient.
Density. a WiFi-based indoor location platform and another MacDonald Ventures investment, is designed to capture data around occupancy and utilization in a space, deliver insights for analytics and security solutions, and drive action to help people use spaces better. Density’s API can integrate with virtually any legacy tool to create customized solutions to manage traffic patterns, contact tracing, or employee productivity.
Top SaaS Angel Investor: Steve MacDonald of MacDonald Ventures
Steve MacDonald is an angel investor with an eye for SaaS startups as unique and rebellious as himself. As a serial entrepreneur with a history of founding and investing in world-changing businesses, Steve is not afraid of risk. He embraces it, understanding that risk is an inherent part of angel investing and thriving on finding and funding disruptive, innovative tech companies that are worth that risk.
Through this unique approach to SaaS angel investor funding, Steve can weather the challenges of early-stage startups and provide his expertise and mentorship to overcome common obstacles and push a startup toward success.
Because of this perspective and investing style, the right investment is more than just a financial one for Steve. It also comes along with his guidance, firsthand startup experience, and overarching mission to nurture the next generation of world-changing tech entrepreneurs.
Focused on these kinds of revolutionary tech ideas, Steve is looking for his next game-changing SaaS technology investment. Just as it’s important for angel investors to make the right investments, it’s also important for founders to find an angel investor that fits their personality, expectations, and company vision.
Finding the Right SaaS Angel Investor
Just because an angel has the cash to fund your business doesn’t mean they’re the right investor for you. Ideally, you’ll find one that can not only meet your funding goals, but also provide insight into the industry and into entrepreneurship itself, open doors to opportunities with other potential investors, suppliers, or perhaps even customers, and steer you toward the winning course.
If you’re on the brink of changing the world with a SaaS solution and need the right angel investor to spur your development with both funding and expertise, get in touch with Steve MacDonald of MacDonald Ventures.
FAQs – Seeking Angel Investment for SaaS
Which Startups Do SaaS Angel Investors Choose to Invest In?
SaaS angel investors are going to be zeroing in on which startups have a WOW! Factor (a simple, understandable feature that impresses), a minimally viable product (MVP), some traction and revenue, and a founder they believe in. They’re also interested in a company that is creating a product that addresses a need they’re familiar with or within a field they have experience in, like Fintech, CRM (customer relationship management), or RPA (robotic process automation).
Ideally, they’d like to see the potential for a company to achieve additional financing for a valuation markup soon or a viable exit plan for liquidity.
Some of the top metrics investors look for when deciding which SaaS companies to invest in include:
- CAC Payback – Customer Acquisition Cost payback, or how many months it would take to make back the money invested in acquiring new customers
- ICP – Clear Ideal Customer Profile that illustrates the company understands the target customers, developed from research, past experience, and industry insight
- CMRR – Your committed monthly recurring revenue
- High Use, Low Customer Churn Rate – Products with a strong customer base and low church, which is the rate at which customers stop using a product or service during a given period of time, also known as attrition rate. Churn should be less than 10 percent
- CAC – A ratio of 3:1 of the lifetime value of a client (LTV) to the client acquisition cost (how much it costs to acquire a new customer), which means the company earns three times more per customer than it costs to acquire them
- Expansion Growth rate – Measured by the expansion monthly recurring revenue (MRR) rate, the velocity at which additional revenue is generated from already existing customers
- Net Revenue Retention Rate – The percentage of recurring revenue retained from existing customers, calculated by finding total revenue minus churn
- Customer Retention Rate – The percentage of existing customers that the company retains in a given period of time
- Annual Net Revenue Retention Rate – How much recurring revenue from existing customers the company retained annually, 110% or above is excellent
What Stage is My SaaS Startup In?
There are six primary rounds of funding for SaaS startups:
- Idea Stage – Here, you’ve got a brilliant idea brewing in your mind without a team, product, or traction to support it. You’ve recognized a need or issue online or within software and have a solution in mind.
- Pre-Seed Stage – You’ve started creating a specific product and need funding for development. With the help of your own bank account, friends, family, and perhaps early-stage investors or an accelerator, you begin development.
- Seed Stage – With an MVP, you can get feedback from market testers and research and start to develop some traction. Angel investors and early VCs begin to show interest.
- Series A – Your traction and revenue are increasing. Angel investors are still involved along with a new wave of VCs.
- Series B – You’re looking to raise 7-8 digit funding, so large VCs are your main target as you continue to expand market reach and traction.
- Series C – You’ve typically made it past your third year, now becoming the winner of your niche or currently competing to secure the title. You’re looking for additional VC funding to add a new product or expand into new markets.
Where Can I Find Potential Investors?
There are several ways to locate, identify, and get in touch with potential SaaS investors, both online and offline:
- LinkedIn – Type in either “angel investor” or “venture capitalist” to browse profiles of potential investors in your field.
- AngelList – A marketplace for angels and startups, AngelList provides a place to list your company and search for potential partners by filtering by region, field, etc.
- Angel Investment Network – Online platform where you can sign up, upload your pitch, find information about potential investors, and connect with good matches.
- Gust – Gust.com is a network with over 80k investment professionals who can provide recommendations or connect you to investment opportunities.
- Other VC Sites: Other SaaS-focused sites to connect with VCs include SaaStr Fund, Florida Funders (of which I’m a partner), 500 Startups, and Accel.
- Conferences – Tech conferences such as SaaStock (multiple countries), SaaStr (Europe and US), Web Summit (Portugal), and LTV Conference (US) are great places to meet with other investors, successful companies, other startup founders, journalists, VCs, and private equity firm reps.
- Accelerators – Joining an accelerator can expose you to local investment opportunities and provide guidance to increase the likelihood of finding funding.
Networking – Using your local network of other founders, angel investors, and venture capitalists can be beneficial when looking for potential investors.