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Episode Show Notes
In this episode of the SaaS Buyers Club, Stephane Nasser, co-founder of OpenVC, breaks down the core elements of fundability for early stage startups. Stephane Nasser explains that many founders struggle to raise capital because they lack a proven track record or clear market traction. The discussion covers the critical decision between bootstrapping and seeking VC funding, highlighting that venture capital is an accelerant for growth rather than a prerequisite for building a product. Stephane Nasser also shares technical advice on entity structure, emphasizing the importance of the Delaware C-Corp, and discusses how founders must treat fundraising as a professional sales process.
Episode Transcript
Is Your SaaS Fundable? The “Fundability Framework” for Raising Capital
Every founder believes their startup is the most beautiful baby in the world. However, as Stephane Nasser from OpenVC points out, venture capitalists see ten babies a day. To them, most look like “trolls with deformed faces.”
The difference between a founder who gets funded and one who spends nine months getting rejected is fundability. Fundability isn’t a soft concept; it is a cold, calculated framework based on two pillars: The Past (Track Record) and The Present (Traction). Without a previous exit or high-growth revenue, you aren’t yet “sexy” for investors.
Understanding VC Math: The 100x Rule
To be fundable, your SaaS business must be able to return 30x to 100x of the investor’s check within seven to ten years. If a VC invests $1M today, they are hunting for a $100M return.
This math requires three specific elements:
Massive Market Size: A $1B market is often too small because you cannot realistically capture 100% of it.
Scalability: High margins and low marginal costs are non-negotiable.
Capital Efficiency: The ability to turn $1 of investment into $5+ of growth.
When Should You Avoid Venture Capital?
Today, the cost of building “vanilla software” has plummeted due to AI and no-code tools. You may not actually need a VC. Stephane Nasser identifies three types of founders who should consider bootstrapping instead:
The Bootstrapper: Founders building simple products with low-cost distribution channels.
The Cash Cow Seeker: Those who want a profitable business that “prints money” for themselves rather than chasing a billion-dollar exit.
The Independent Founder: “Control freaks” who dislike having a board of directors or a “back-seat driver.”
Raising VC is a pact to grow at an unnatural rate. If tripling your revenue every year makes you sick, keep 100% of your company and grow organically.
The Technical Checklist: Why a Delaware C-Corp is Mandatory
If you decide to raise, you must embrace industry standards. This is not the place for “creativity.” Investors almost universally require a Delaware C-Corp.
If you are currently an LLC, take note of these requirements:
The Signal: Investors view LLCs as a negative signal suggesting you don’t understand the “rules of the game.”
The Cost: A conversion typically costs around $5,000.
The Timeline: The process takes about two weeks and involves reissuing founder stock and vendor agreements.
Expert Help: Working with specialized firms like Optimist Legal ensures this transition is handled correctly for Tier 1 firms.
Fundraising is an Enterprise Sales Process
Founders often obsess over website UX but send out “ugly, text-heavy” pitch decks. When raising, your company is the product, and the investor is your client.
Avoid Cold Outreach Templates: Never start an email with “Dear Investor.” It signals spam.
Use Warm Intro Social Codes: Treat the pitch like a sales funnel with multiple stakeholders.
Maintain the Power Dynamic: Don’t show up like a student reciting a lesson. Show up as a peer discussing a massive business opportunity.
Essential Resources for the Modern SaaS Founder
Before committing to a nine-month fundraising journey, you must do your homework. You cannot outsource your raise to a broker or designer.
OpenVC Fundability Test: Rank your startup against thousands of others in their database.
SaaS Metrics Study: Deep dive into LTV, CAC, and Churn benchmarks to understand your unit economics.
SaaS Growth Dashboard: Use a real-time dashboard to prove the traction required for a successful seed round.