For SaaS founders to succeed at the big VC funding game, they need to hit their ambitious growth goals every year and then sell the company for a big payoff in 5-7 years.
VCs will tell you this rarely happens. But they don’t advertise this fact.
On average, about 20% of VC growth investments pay back their investors in a way where both the VCs and the founders win.
After all their vetting, screening, and due diligence, about half of VC investments don’t return anything to investors or founders.
It’s not impossible for serious SaaS founders to win the game after taking VC funding. It’s just not likely.
Jafar Owainati and two cofounder friends started Loopio in 2014 to provide a modern cloud-based app to help salespeople efficiently respond to RFPs from big organizations.
They bootstrapped Loopio for several years and grew to $3M ARR before choosing to take a modest round of growth investment in 2018 from a practical VC investor, OpenView Venture Partners.
They kept growing the company and eventually took a $200M strategic PE investment in 2021 from Sumeru Equity Partners.
Jafar had already left Loopio to start a new SaaS business called Barley. So there was a win for the founders when Sumeru came in.
He and his co-founders won the VC funding game, but it took some unusual circumstances to make the math work well for everyone:
- Loopio bootstrapped to $3M ARR before taking any outside funding.
- They had a single VC partner who invested just once.
- Many VCs were courting them, but they chose the most practical investor with the simplest terms.
- They started Loopio when cloud solutions were still new for big enterprises.
- They took on a major strategic investment from a major private equity investor at an all-time high for SaaS company valuations.
- The founders were very disciplined about business strategy, metrics, hiring, and spending throughout their entire journey.
- All three founders were aligned about taking on VC investment and going for it.
Loopio is now a growing SaaS business with hundreds of employees.
It’s a practical founder success story where both the founders and their VC partner won big.
But it took the rare combination of managed growth, business discipline, founder-funding fit, and perfect timing.
It usually doesn’t happen that way. Congrats on your big win, Jafar.
Check out Jafar’s answer in the comments below: “Was the effort and dilution of raising VC funding worth it for you the founders, looking back?”
Check out this in-depth interview with Jafar Owainati here on the Practical Founders Podcast:
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