Move over T2D3, Covid has brought us C170R

Pre-COVID SaaS startup investing had evolved into something of a numbers game; especially post Series A at the expansion capital stage. In the oft-cited T2D3 formula, companies that tripled ARR in consecutive years then had doubled or were on track to double thrice in a row were set for greatness. Later stage investors could almost “color by numbers” and plug in these formulae to predict success.

The COVID economic season has reset everyone’s plans and changed what investors are looking for. As a small firm we have invested just under $1B in enterprise SaaS companies at the early stages and helped 25 of them get over $10M in annual revenue, 15 of them over $30M, we are reflecting on the hard work it takes to get from the stage where we invest — a few initial customers — to being ready for expansion capital.

Move over T2D3, there is something leaner

Based on recent financings in companies in our portfolio (some unannounced) plus those in our peer group of leading SaaS investors we see a pattern and are willing to call it. Out with T2D3, in with C170R (COVID 170% Remote).

We see that if a startup entering COVID season with $2–20M in revenue is on track for 170% of their 2019 revenue AND is aligned with the new normal of remote, they will be able raise new capital on good terms and are set up for future venture success. In other words: in this environment startups do not need to double or triple revenue in 2020 and probably 2021 (although if they have, they will of course be more handsomely rewarded.) The metrics have changed.

Annual Recurring Revenue (ARR) at 170% of 2019 is easy to understand but what do we mean by remote? As many people are maintaining social distancing, limiting their travel, limiting time in the office and in general limiting in-person interactions a new normal is emerging that we think will last past this viral season.


  • Remote work
  • Remote play
  • Remote shopping
  • Remote education
  • Remote care

As examples, think about sports and shopping: even though it will likely be possible in the future for many people to go to a sports game in person and shop in a store, the viral season has shown everyone that more immersive experiences are possible remotely and consumers will expect to be able to mix in remote experiences alongside the occasional in person visit. And why would a business not want to capture that additional revenue?

People will surely work and study in person but they may attend meetings and classes remotely some of the time in a mix that is more remote-forward than it was before. Why would you want to go to the hospital when a doctor can come to you for less intensive interactions? Will business banking ever be done in person again? There are thousands of traveling inspectors, account executives, inventory managers, merchandisers, and all manner of supervisors who have realized that they can get a lot done with a camera and save time and money on travel. Computer vision technology and robotics will only make this more compelling.

Finally, we are seeing that judgement is back. Where before investors could like a team and trust the T2D3 pattern as evidence of product market fit, today investors must make a more difficult forecast about what the post-COVID world looks like. Which solutions does it favor, which go to market strategies will work, which teams will accel, which verticals will be affected and how? There is no data so forecast models won’t predict winners, the old school guidance from experienced roll-up-your-sleeves investors will be needed.

As always, we’re excited to dig in.

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