How To Start A SAAS

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 How to Write Your Investment Thesis for Your Fund
 
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 An investment thesis is a simple and clear description of
 <ul>
 
 1.Why is the company owned by you?
 
 
 2.What could happen as per your expectations?
 
 
 3.What do you think the company does not get market credit for?
 
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 A stock pitch is always a must in buy-side interviews like those for private equity, hedge funds, and venture capital because that is what you’ll do on the job and also the best way to set yourself apart. A good stock pitch will make you memorable in the eyes of the interviewer and investors. As a result, knowing how to write a good investment thesis is critical if you want to break into those industries.
 
 
 
 A good investment thesis consists of three parts:
 
 
 
 1. 
 observation of large economic and industry trends and your company’s positions within these trends,
 
 
 2. a thorough review of your company’s ability to support growth,
 
 
 3. a final summary in which you express your opinion on the company.
 
 
 
 In short, an investment thesis includes what you recognize and expect from the company, the factors supporting its potential growth, and why you're investing in it. The investment thesis is also formally written up as a document or slide presentation and presented to the buyer’s investment committee for deal approval. An investment thesis helps investors evaluate investment ideas, ideally guiding them to pick out the simplest ideas that will help meet their investment objectives. Within the world of investments, the thesis is a game plan to help readers understand the large picture and nuances attached to an investment strategy.
 
 
 
 So, to make it simple, it’s just numbers and values you follow while investing in startups. It should describe why you invested in the company and what you expect to happen. It’s the kind of guide that you initially established, and it helps you make proper investment decisions. It determines which initiatives you should get involved in and which are not really in line with what you believe in and want to immerse yourself in when it comes to funding startups, taking over, or buying some entities. The important piece is that you need to prove that your thesis is true. When creating an investment thesis, there are so many different approaches that one can take. It’s almost overwhelming. 
 
 
 
 Regardless of your investment parameters, you must approach an investment thesis like a plunger. The thing about VCs is that you just have to become "The Expert" in whatever industry you select. Notice how I didn’t say "an expert"—this is because venture funds typically get very particular as to what types of investments meet their investment criteria.
 
 
 
 Naturally, having strict standards makes your pool of potential investments much smaller. Risk capital is arguably the riskiest kind of fund to take a position in. When it comes to VC firms, investors are swinging for the fences and hoping for a "home run." After you are putting a VC investment thesis together, there are 3 basic steps to follow:
 
 1. Choose your Verticals
 2. Conduct Market Research
 3. Make a Pitch Deck & Get Feedback
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 1. Choose your verticals
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 When you are developing your thesis or investment parameters, you really need to lean on your or your team’s industry expertise.
 
 
 
 Key advice: The exceptional manner to do this is much like in science class—form your speculation and check it out.
 
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 What industry are you going to invest in??
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 Healthcare? Fintech? Supply Chain Companies? Ecommerce? Environmental? Agricultural? Engineering? Industrial? Educational? Instead of listing them one by one, consider ANY college major or minor as a good starting point.
 
 
 Once you’ve got your industry figured out, then answer the query:
 
 
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 What stage of companies are you going to invest in??
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 a. Early-level VC – also referred to as Seed funding – is the primary initial capital given to an early entrepreneur & commercial enterprise. (Normally, from own family or buddies.) This is where the word Angel Investor comes from too.
 
 
 b. Middle Stage VC – Series B or C
 
 
 c. Late-Stage VC – Series D or Later
 
 
 
 Note:
 When you are developing your thesis or investment parameters, you really need to lean on your or your team’s industry expertise.
 
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 What type of capital are you issuing??
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 Is it debt? Is it equity? Is it a mix of both? Do you do convertible notes? Do you have concentration limits?
 
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 2. Conduct Market Research
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 The next step is to determine the WHY behind your investments. Start by doing the following exercise:
 
 
 First, find five companies that you think could be potential investments. Then answer the following questions:
 
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 a) Which company has the best Management Team? 
 Why?
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 b) Which company is the most financially stable? 
 Why?
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 c) Which company has the best market potential? 
 Why?
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 d) Which company is the least risky to invest in? 
 Why?
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 By completing this exercise, you will start seeing things you like or dislike about each company. Maybe one of the companies has a super young management team, and you’d instead invest in companies that have more experienced teams. Maybe one company has too much debt, and you’d instead invest in a company that has a better runway.
 
 
 
 Maybe one of the organizations has an extra diverse product imparting and solid coin flows. Perhaps one is a situation of political risk?
 
 
 
 Write out a number of the things you dislike approximately making an investment in those corporations.
 
 
 Then, go out to the organizations that don’t meet your criteria
 
 
 1. <del>Company A</del>
 
 
 2. <del>Company B</del>
 
 
 3. <del> Company C</del>
 
 
 4. <del>Company D</del>
 
 
 If you had to cross out three of the companies, then the next thing you need to do is find three more that meet your new standards. If you found them easily, then your investment thesis is probably too vague. If you can't find any companies that fit, you're either too strict or in the wrong industry. You should be able to come down to at least 3 and no more than 8 deals that fit your investment thesis right now. New companies will arise and others will fall out, but you need to find that balance. Once you’ve picked your vertical and conducted market research, then congratulations! You’ve got your Investment Thesis Outline!
 
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 3. Make a Pitch Deck & Get Feedback
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 Feedback is one of the best tools for success in life. Move to get remarks from mentors or peers within the industry. See what they think! They may tell you about considerations you haven’t even thought about. If they bring about fatal flaws that you missed, move lower back to the drawing board and repeat.Once you’ve got a good thesis that has been vetted, finalize those in your PPM and LPM, and you are good to go! Lying to investors could be a slippery slope, and you ought to never do it! It may cause a loss of cash and even prison time.
 
 
 Once, I was talking with one of my students, and he mentioned to me that he didn’t know how to measure his fund’s performance. Return on Investment? Average Annualized Return? Compounding Annual Growth Rate? Cash on Cash Return? Which one is the best? or none at all? I stated, "Let's start by identifying how deceptive a number of those numbers may be, and then go from there."
 
 <table class="table table-bordered">
 <thead>
 <tr>
 <th>YEAR</th>
 <th>0</th>
 <th>1</th>
 <th>2</th>
 <th>3</th>
 <th>4</th>
 <th>5</th>
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 <td>RETURN</td>
 <td>-</td>
 <td>22%</td>
 <td>7%</td>
 <td>28%</td>
 <td>15%</td>
 <td>17%</td>
 
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 Let’s say the above table represents your historical period of returns, which has been pretty volatile. What is the best way to measure this? A financial advisor might come to you and say, "Your Average Annualized Return for last year was 17%." In the last two years, it was 16%. 1.3% after three years. 2.75% in the last 4 years. "And the average over the last five years has been 6.6%." Now, as a fund manager, which two years would you want to tell your investors about? Last year or two, right? But is that okay?
 
 
 No, this is why I like to call it the "Lie of Averages," because it is very easy to misconstrue what has happened. AAR is out.
 
 
 If you want to be successful in your fund, you should never hide or give deceptive information. Using a CAGR with those same numbers gives about a 5.2% return. However, CAGR is used more as a forward- looking metric to assume returns, not necessarily for funds. Return on investment is simply your (Current- Cost)/Cost which is 26%, but this does not account for the Time Value of money. For investors, 26% in 6 months vs. 26% in 5 years is a HUGE difference!
 
 
 Not One, But two. You will want to use IRR in your funds because IRR is good for understanding the Time Value of money. But based on your returns, it gives you only a 4.8% Internal Rate of Return. Did you make 4.8% over 5 years? No, you earned 26%. This is still important to you, but to give the full picture, we combine the IRR with your Cash-On-Cash return. Cash on cash is a multiple based on money in and money out. You put in $100 and get $126 back. That’s a 26% percent return and coupled with the IRR, this helps your investors understand what is happening with their money.
 
 
 You can also use Cash-on-Cash vs. ROI because it will help you understand dividends or property cashflows in your fund. Ensure you are obvious along with your investors. Don’t finagle your way around and be misleading. Not only is this wrong, but it is unlawful.If you had a bad month, that’s okay! I have to tell my investors often that we had a bad month or quarter. You also allow them to know that you will learn from your mistakes and that you take their cash severely so that you will not let it occur once more.
 
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 How Billionaires Pick Deals
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 One of the biggest concerns I get from fund managers is that they don't know how to pick winning trades, or even spot them.
 
 
 "How do I know which offer to choose?"
 
 
 "Which industries or niches will do well in the future?"
 
 
 "Which asset class do you invest in?"
 
 
 I see; I have been through this once. I understand your frustration! Instead of waiting for someone to bring it to me, I decided to take action and talk to people. Your network is usually one of the best ways to find a deal. It's one. I once had a few hours' lunch with a multi billion-dollar fund manager. His advice on the subject was too good to share!
 
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 The 100/1 Rule
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 You should know that this works for all types of funds. We sat down and looked at some potential properties, and he told me: "It is very important to follow the 100-to-1 rule for your first few trades." And I said, 'What do you mean?' He further explained that the 100/1 rule states that at least 100 trades should be seriously considered before choosing one to invest in. This is because it’s easy to get caught up in the excitement of investment and overlook the potential pitfalls.
 
 
 With so many opportunities available, it can be difficult to know which ones are worth pursuing. The 100/1 rule helps investors narrow down their selection process and focus on only those investments that have a higher chance of success.
 
 
 That's how thorough you have to be and how to make sure you get the crème de la crème. This is especially true at the start of the fund. Most of us only have one chance to make this work. We're not raising all this money from investors just to "do things right."
 
 
 We want to make sure we understand what we are talking about and give you great deals! He said that if you do well on your first deal, you'll only get a tenth of what someone else is going to give you as a new manager. It's a trial period! Test how it works. If you do good, you will get more. He also said that if the second one goes well, the wallet will really open up, and the third investment could be from 5x to 10x.
 
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 The 100/1 Rule
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 Are you aware of its importance?
 
 
 This is where an analysis of 100 potential deals, 100 potential businesses, or 100 potential properties can help. Imagine how well you can find a deal after looking at 100 deals. That's why I emphasized this in Step 1 of the Fund Launch Formula. We hope to find that great deal. I told the investor he would die before giving a 14% return, as we were aiming for a 20–25% return fund. Learn from previous potential deals that have been analyzed.
 
 
 When analyzing these trades, we need to be able to track them and compare them to each other. How do you know which deal is better when you have nothing to compare it to? Or maybe something has changed and you want to be able to confirm that a deal that wasn't working before is now working. After tracking and analyzing 100 deals, you can sort them to see which ones are a SLAM-DUNK in terms of ROI. You can then contact the investor. Trust me, if you can show your due diligence, fundraising will be much easier.
 
 
 At last, you have to be conscientious to apply the 100/1 rule and analyze 100 trades to find one home run. Don't analyze 100 transactions. Even if you don't think any of them are that good, analyze them all just as seriously. I was surprised to see so many deals that I thought "this is impossible", but when I tried it for practice, it turned out to be a pretty good deal, and I ended up spending it for my fund!
 
 <ul>
 <li>Be Thorough.</li>
 <li>Maintain a history of due diligence. Run with 1!</li>
 <li>I know from experience that if investors are excited, it's much easier to raise and close.</li>
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 Have you ever heard the saying that success comes from between your ears? I abide by that, so be there.
 
 
 I think your thinking determines how wealthy or poor you become. If you want to succeed, you must understand what goes on in the minds of the wealthy. Rich individuals operate and manage differently. They are more certain, capable, and effective. 99% of them think in this manner. The wealthy don't wait for things to happen; instead, they force them. They make good use of their time because they understand that it is their most important resource. The wealthy are also aware that success is a process and not a destination. The wealthiest individuals frequently use the phrase "time is money" because they think that if you use your time well, you'll end up with more money. They are aware that time is limited and should be utilized intelligently rather than squandered on pointless activities like watching TV or spending all day on social media
 
 
 The majority of individuals find that mindset, or what you think about yourself and your capacity to produce riches, is the key to prosperity. The way wealthy individuals think and behave is considerably different from how normal people do. They have an entrepreneurial perspective as opposed to a corporate or wage-worker mindset. They believe in themselves and their capacity to make money work for them because they have greater levels of self- efficacy and self-esteem than normal individuals.They have faith in their capacity to consistently generate riches. If you don't believe you can accomplish this, then you can't!
 
 
 The wealthy typically spend their whole days thinking about money. They are always attempting to cut back on their spending or find new methods to increase their income. They don't spend money they can't afford, and they don't take out loans they can't pay back. The wealthy invest their time in activities that will increase their income. Because of this, the majority of them do not work; instead, they own businesses or make investments in stocks and other types of assets. They think that working hard, rather than getting lucky through chance or inheritance, is the best way to get rich. The top 1% of earners have a very certain attitude that has helped them succeed and amass a huge fortune. They study a lot, strive to always get better, and, most importantly, grasp opportunities when they arise by taking decisive, expansive action.
 
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How To Start A SAAS

Chapter-1

Chapter-2

Chapter-3

Chapter-4

Chapter-5

Chapter-6

Chapter-7

Chapter-8

Chapter-1

Chapter-2

Chapter-3

Chapter-4

Chapter-5

Dan Lesniak

Cody Davis

Samuel Zell