#104: Turning VC-Funded Startups Into Profitable, Thriving SaaS Companies – Krista Morgan

Aug 2, 2024

Krista Morgan, CEO and General Partner at Stage Fund, specializes in revitalizing struggling SaaS companies. She shares her journey from one startup's failure due to excessive growth funding to creating a successful model for distressed firms. Key highlights include the pitfalls of 'growth at all costs' strategies, the importance of sustainable growth, and the advantages of acquisitions over organic expansion. Krista emphasizes the need for practical decision-making while keeping a strong vision, turning challenges into opportunities for profitability.

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ANECDOTE

No Magic Bullet

Krista shares an example of advising a CEO against hiring a "magical" VP of Growth.
She emphasizes leveraging existing teams and trusting their abilities instead of seeking external solutions.

INSIGHT

VC's Blind Spot

Greg Head points out that the VC world often ignores the high failure rate of startups.
He suggests more consideration for downside scenarios in VC contracts.

ADVICE

Practical Funding Strategies

Krista advises practical founders to bootstrap as long as possible and consider creative funding options.
She also recommends negotiating downside protections in investor agreements.

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Krista Morgan started her first tech company by raising funding and trying to grow very fast. When the company faced a big issue and failed, she learned that big funding was more of a problem than a help in the growth and wind-down processes.

Krista is now CEO and General Partner of Stage Fund, an early-stage private equity fund that makes control acquisitions of venture-funded SaaS companies that are stuck and need an alternative option to continue in a practical and profitable way.

In this expert episode, Krista explains:

Why "growth at all costs" rarely works for software companies
Why VCs and funded founders don't plan for the likely scenario that the company won't have a successful exit
What's happening in M&A for practical SaaS companies
Why acquiring software companies to grow is often less risky than growing organically
How to approach potential future acquirers to have a conversation about someday joining forces

Quote from Krista Morgan, General Partner of Stage Fund

"The game for practical startup founders is to find a way to make good decisions in the reality of today while still holding this big vision of the future. We can't just grow at all costs, and we can't just make all these big investments.

"There's this misconception that practical founders don't have a big vision of the future. Of course, they do. They're just thinking about it and getting there in a different way. And that's where we want to be.

"When I was founder of my first tech company, I thought money was always the answer. But money is usually NOT the answer. There is usually an answer, and maybe it takes money to get there, but it's not the magical thinking of, If I just had five more people, I'd be here. Maybe, or maybe you wouldn't. There's no guarantee on that."

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