“If you plan to raise money this year, you just know that your best case is probably the fourth quarter.”
TechCrunch this morning I met with Chris Sugden, a managing partner at Edison Partners, to talk about the current fundraising market, what’s next for SaaS startups, and if there’s any good news in today’s market.
As the stock market continues to turn (more up than down) and the unicorn exit market looks increasingly dying, it is critical for startup founders to understand how private investors are using capital today and in the coming quarters. A large number of startups, which would normally have grown up in the first quarter of this year, have not done so. The fundraising market they encounter the rest of the year will help determine their business performance.
Before we go into all these questions and answers, a quick note about Edison Partners . Edison is a growth stock company, which Sugden says means that their checks range from $ 5 to $ 30 million, with a sweet spot between $ 10 and $ 15 million. Regarding the phase, Sugden said Edison plans to invest capital in companies with sales of between $ 8 million and $ 20 million, noting that the larger companies are expanding his company’s check size to the maximum.
Software-as-a-Service (SaaS) accounts for approximately 75% of the company’s investment, the other 25% for other types of startups. According to the investor, the average growth of the company’s 12 investments from its ninth fund in the fourth quarter of 2019 was approximately 100% year over year.
So Sugden is an active investor in a company that has been around for several decades and has a large account from which to invest. Let us examine how it shakes the market.
Fundraising in 2020
The following excerpts come from the TechCrunch chat with Sugden, which we have grouped and edited for reasons of clarity. We have withdrawn the conversation and can pull out the parts that were most useful for startups. We start with his view of the 2020 venture capital market.