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Meet Jason M. Lemkin, an American VC investing in European SaaS

February 8, 2016

Jason M. Lemkin is THE SaaS Guru! He co-founded two companies — NanoGram, acquired by Greatbatch for $50M in 2004 and EchoSign sold to…

Jason M. Lemkin is THE SaaS Guru! He co-founded two companies — NanoGram, acquired by Greatbatch for $50M in 2004 and EchoSign sold to Adobe in 2011 — and is a very VERY active SaaS-only investor.

He’s also behind the largest web community of SaaS founders and entrepreneurs: SaaStr. SaaStr came to life when, back in 2012, Jason published a blogpost on SaaS revenues and began answering SaaS-related questions on Quora consistently. Today, SaaStr has +3M monthly views and Jason’s Quora answers gather +18M views.

Jason is also organizing the world’s largest conference on SaaS: SaaStr Annual.

This year’s edition will start tomorrow in San Francisco and features some amazing speakers: thousands of founders of the hottest SaaS companies and top investors (including Christoph Janz who we interviewed a few days ago). Evidently, all the tickets have been snapped up.

A few weeks ago, we began a series of interviews with VCs investing in SaaS [check it out here]. Each time, we ask our interviewees for their insights on the industry, with a focus on Europe. For this 5th interview, we chose Jason M. Lemkin as he is one of the most active American VC investing in European SaaS. Here’s what he told us:

Jason Lemkin’s Insights on the SaaS Industry

Investment focus: Pretty clear, 100% SaaS.

European SaaS Portfolio: Talkdesk (Portugal), Algolia (France), RainforestQA (UK), Pipedrive (Estonia), Front (France), Showpad (Belgium).

What’s your investment thesis?

I invest in companies with founders who are better founders than I was (adjusted for time and experience) with superior unit economics and in categories that could become hot some time soon.

Why do you invest in SaaS?

I know quite a bit about SaaS and want to leverage that domain of expertise as much as possible. I was a reasonably successful SaaS founder myself and want to built on my learnings, mistakes, and insights. It’s also my hobby and passion. We got over 3,000,000 views a month on SaaStr content and will have 5,000 founders come to the SaaStr Annual. It’s best — and great — to stick to what I know.

What makes a good VC for a SaaS startup?

It depends on the phase. In the early pre-revenue days, you should look for a supportive and patient VC that has made successful SaaS investments before. That way, nothing will really freak you out.

Once you have a hint of traction, if you have the choice, you should pick VCs at the different phases that can help you the most. For instance, in the Seed stage, where I specialize, I can help you recruit your management team, get more PR and exposure, and if you hit the plan, likely get you your next round of financing.

But in that next round, the A or B round, you will be big enough, with millions in ARR, to want something else from your next investor. A larger check, to start with. And by this phase, you may not want operational help any more.

What investment trend do you foresee for 2020 in the SaaS industry?

I foresee that by 2020 we are going to hit “The Golden Age of SaaS”. We’ll have 50+ public SaaS unicorns.

Do you consider yourself to be in competition with European VCs for SaaS startups?

No. First, I only invest in founders that pick me. If they want someone else, that’s great. Whatever works for them.

Second, I do very early investments. I do “Series Seed” investments once a company has $10k, or $20k, or $40k a month in revenues.

Third, more often than not, many of the best European VCs want me to invest in their companies. I can help them with their “U.S.-ificaiton” as I have with Talkdesk, Algolia, and other leaders. European VCs sometimes look for one top-tier SaaS-experienced U.S. VC on the cap table.

What’s the n°1 startup that you’d like to have in your portfolio?

There are too many to count :). I wish I was a venture investor in Zenefits, Intercom, Slack, Cloudinary, Plangrid… because the CEOs are just so great. I’m just in awe of them.

But my portfolio is killing it. So I feel pretty good ;)

Follow Jason on Twitter and Quora.