CM Weekly: Paying for Software, DOJ vs. Plaid, Materials for Investors

Welcome to this week's edition of CM weekly featuring stories I found interesting on startups, venture capital, and fintech.

Pretty much the only thing on everyone's mind last week was the US elections, and I’m so happy we have received some clarity on what the outcome will be. ????

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Written by Chris McCann, General Partner @ Race Capital, former Greylock Partners. More about me. 

How we pay for software 

The tech world has unfortunately set the expectation of software to be free, and as a result have had to monetize through the collection of data & advertising on the backend. However, this only works with consumer level of scale—in all other cases, SaaS and subscriptions are a much better model for aligning the value of creators & consumers.

Adam Wiggins of Muse recounts the philosophy of how we pay for software and some principles of what to do while charging for software. TLDR: 

• Individually priced prosumer products are typically priced between $5/month to $15/month. (Business tiers however are priced very differently) 
• If you do charge, make sure the buying process is a good experience, make it easy to cancel, give notifications before payment, and make data easily exportable. 

DOJ vs. Plaid & VISA

Last week the Department of Justice (DOJ) filed a suit to block Visa's proposed acquisition of Plaid. The case file is public and is a fascinating read, a few interesting takeaways: 

• Plaid was developing a new solution to be a substitute for Visa's online debit services.
• Plaid was considered to be a “defensive” acquisition for Visa for them to entrench Visa’s network even further and shut out competitors.
• Visa’s offer of $5.3B to acquire Plaid was 50x their revenue (~$100M).

What should I send investors?

Before going out to do an official fundraise, there are a few key materials the founder(s) should put together beforehand, including a well crafted introduction and an investment deck.

• Nivi from Venture Hacks wrote a classic post on crafting a good introduction email.
• My partner at Race Capital, Edith Yeung just gave a great talk on what investors look for in an investment deck & pitch.

Once an investor has moved onto due diligence, there are a few other materials to have on hand including cap table, company documents, customer references, and founder references. However, this is highly dependent on the stage and industry your company is in.

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