In this episode, Practical Founders Podcast host Greg Head discusses the most important things venture capital investors don’t tell new SaaS startup founders. He emphasizes that VCs invest in very few businesses and are looking for big wins. Greg highlights the importance of understanding the game of venture capital funding and the alternatives available to SaaS founders.

“If you’re thinking about raising VC investment, do your homework so you know what you are signing up for before. VCs are not evil people, and it’s not a bad business model—for them.

“The world has changed for SaaS founders in the last 5-10 years, and it’s still changing. You no longer need VC funding to start most B2B SaaS software companies. It’s 10 times cheaper to create a sellable SaaS product and go to market now. And founders can get higher multiples earlier when they sell their companies. VC funds are also much bigger, so it’s riskier for founders to play that game.

“You just don’t need to make a crazy all-or-nothing bet that your company will create a billion-dollar exit in seven years, which VC investors require to win. The best case scenario for 80 to 90 % of software companies is NOT to raise big institutional venture funding.”

• Greg Head on LinkedIn
• Practical Founders website
• Practical Founders Podcast
• Greg Head’s blog

Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies—without big funding.

Subscribe to the Practical Founders Podcast using your favorite podcast app.

Mike Trasatti spent 10 years in the automotive dealer software business before he found an auto dealer in Iowa who had built is own complete software system. They partnered up in 2008, and Mike became the first CEO of the spinout software company, DealerBuilt.

DealerBuilt grew slowly as a bootstrapped startup in a market full of large incumbent competitors. They had a better approach to managing multiple dealers in a group with their dealer management system (DMS). DealerBuilt is powerful software that manages the entire financial operations of an auto dealer in the US.

They grew steadily to 450 dealer customers and 100 employees in 10 years before deciding to partner with ParkerGale, a private equity investor, to help them with their next growth stage in 2019. Mike continued as CEO until 2023, navigating through the COVID years and acquiring several “tuck-in” products to extend the DealerBuilt solution. Mike is now an independent advisor to DealerBuilt and other organizations.

“You’re constantly challenged in the entrepreneurial world. Do you really know what you’re doing? Self-doubt can be tremendously harmful to CEOs. I don’t think you can get into this business without a strong image of yourself and real confidence.

“But you have to balance confidence with humility because you’ll make mistakes. You’re going to have setbacks every week, and some very big ones, too. You can’t lose enthusiasm: You need enough confidence that you’re on the right path and that will carry you more than anything else. Those who don’t lose enthusiasm win.

“When you have both confidence and humility, you won’t be afraid to be around people who are better than you. And you’ll feel comfortable in that space, leading smart people who are championing your journey. They will look at you and think, I want to be there with you to champion this for you. That’s success as a leader.”

• Mike Trasatti on LinkedIn
• DealerBuilt on LinkedIn
• DealerBuilt website
• ParkerGale website – private equity investor in DealerBuilt

Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies without big funding. Subscribe to the Practical Founders Podcast using your favorite podcast app.

Brian Abernethy, founder of Utopaya, is an expert in helping SaaS leaders navigate the complicated process of adding payments monetization to their product offerings and business strategies. With a long history in the payments industry, Brian has worked with hundreds of early-stage SaaS leaders and their investors to optimize their payments strategies.

In this expert podcast interview, Brian explains the basics of payments monetization for practical SaaS founders, answering questions like these:

• When should SaaS companies consider monetizing payments and when is it not a good fit?
• What are the first steps to adding a profitable payments offering to your SaaS product?
• What’s happening in the payments industry to make it easier or harder for SaaS companies?
• How do investors value payments offerings in a SaaS business?
• What are the biggest misconceptions and mistakes that SaaS companies make when get started with payments?
• How can SaaS businesses lower their payments bills for the credit card customer they take from their customers?

Quote from Brian Abernethy, principal at Utopaya
“Most software companies are looking to include some type of fintech offering. Payments is typically the first one of those. These software companies want to own not only the bigger portion of revenue, of course, but also mprove the customer experience.

“Recent consolidation in the fintech and payments industry has created new options for SaaS companies to monetize payments. The big payments providers are now much bigger and have moved upmarket, creating a gap. Many new payments players are designed for smaller SaaS companies, with purpose-built platforms, APIs, and more support for integrated software solutions.

“There are more compelling solutions for SaaS companies to launch truly white-labeled, profitable, and easier-to-implement payments solutions. Also, the market data show that it does positively change the customer experience, so these smaller payment companies are winning share at a fast clip.“

• Brian Abernethy on LinkedIn
• Utopaya on LinkedIn
• Utopaya website

Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies without big funding. Subscribe to the Practical Founders Podcast using your favorite podcast app.