Apr 13, 2023 · 53m · saastr
Top 10 Mistakes Founders Make with Series A with Black Mangroves, Square Peg, Vertex, and GGV
Jenny Lee · 21m spoken Carmen Yuen · 11m spoken Piruze Sabuncu · 8m spoken Arnaud Bonzom · 5m spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Experienced venture capitalists examine the critical mistakes startup founders make when raising Series A funding, offering actionable guidance on investor alignment, business model localization, customer validation, and deal execution.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Jason as informed peer 3.0 Guest teaching 4.7 Guest disagreement 2.4 Jason pushing back 1.1
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 15:21 Calling standard SaaS playbooks a misleading template
Jenny Lee boldly rejects conventional SaaS conference wisdom, arguing that blindly following net dollar retention templates and rigid ARR rules leads founders astray in non-US markets.
Hardest push from Jason ▶ 34:29 Pressing on Southeast Asian SaaS viability vs US exitsThe host challenges the panelists on whether purely Southeast Asian SaaS companies can ever achieve massive exits without pivoting to the US market.
Biggest teaching moment ▶ 16:05 Deconstructing budget-based enterprise models via WPSJenny Lee educates the audience on Chinese market realities, citing WPS to prove that top-tier enterprise software can thrive on lump-sum annual IT budgets rather than traditional per-seat subscription models.
Jason holds their own ▶ 25:40 Explaining VC pocket math and learning check hazardsThe host demonstrates deep investor understanding by explaining why a small $1M check from a $250M fund often signals an option/learning bet rather than a core portfolio conviction.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Understanding Founder, Product, and Investor Fit | 2 | 4 | 1 | 0 | The host opens by teeing up Jenny Lee to define 'founder, product, and investor fit.' Jenny delivers an educational overview on why capital is not just commodity money and why founders must diligence investor backgrounds in complex macro environments. | |
| VC Fund Introductions and Investment Focus | 2 | 2 | 0 | 0 | The host asks routine introductory questions about fund check sizes, stages, and sectoral focus. Jenny, Carmen, and Piruze each outline their firm backgrounds and regional mandates in a straightforward, collegial manner. | |
| Defining Customer Personas and Underlying Business Drivers | 3 | 5 | 2 | 1 | The panel discusses defining customer personas beyond vanity metrics. Carmen and Piruze educate on operational metrics versus simple ARR thresholds, and Carmen illustrates this with the StoreHub COVID pivot case study. | |
| Challenging Standard SaaS Playbooks and Pricing Realities | 2 | 7 | 6 | 1 | Jenny Lee forcefully challenges standard Western SaaS dogmas, arguing that template playbooks do not apply in markets like China where buying is budget-driven. Carmen and Piruze debate pricing courage versus discounting to survive market contractions. | |
| Comprehensive Milestone Planning and Capital Reserves | 5 | 4 | 1 | 2 | Jenny Lee explains lifecycle milestone planning and fund reserve ratios. The host demonstrates VC domain expertise by analyzing fund pocket sizes and warning founders about 'paying to learn' check sizes. | |
| Identifying Budget Paymasters and Navigating Regional Differences | 4 | 5 | 3 | 2 | Carmen uses the Patsnap example to explain tracking budget paymasters across different growth stages. Piruze chimes in with caution regarding service-heavy models masquerading as SaaS in Southeast Asia. | |
| Operational Services and Hybrid Value Models in Emerging Markets | 3 | 6 | 4 | 2 | Jenny Lee argues that pure SaaS is often inappropriate for emerging markets, using EdTech to show how startups must take on heavy operational services to capture 80 percent of value before standardizing software later. |
Statements from this episode (17)
Lee: Founders should reverse-diligence VCs starting from the first meeting
“Having the right investor who knows what it takes to build and have done similar things becomes very important. So doing that due diligence becomes very important. And you should feel very empowered to ask those questions, even from day one of your engagement …”
Sabuncu: Supabase's CTO also serves as its Chief Marketing Officer
“Like we work with a company called Superbase. You might have heard of them. They are a dev tool company. Their CTO is the CMO.”
Lee: Enterprise software buyers in China are budget-based, not SaaS-based
“In China, when you look at so-called SaaS companies, they are, You know, same thing, trying to address similar issues, but the way the market is set up is that many of the customers are budget-based. They are not SaaS-based. They're not going to pay you per mo…”
Lee: GGV portfolio company Kingsoft WPS trades at a $20B valuation
“The best company, one of our investment, WPS, which is like the Kingsoft equivalent, or the Microsoft Office equivalent of the Western world, is the number one player in China. They are budget-based, right? Of course, you know, one could say they are SaaS. The…”
Lee: GGV reserves 50% of its early-stage fund for follow-on investments
“In our early stage fund, we do one-to-one, right? So, let's say our fund is five hundred million, we may, we will only plan to invest 250 half, and reserve the other half, you know, for subsequent support of the portfolio company.”
Bonzom: Unusually small VC checks mean the fund is paying to learn
“You know, you have been getting a check that is way lower than usual check. So they may be paying to learn. So you're not in the same category that a core deal or deal that have been going to put way more than usual.”
Yuen: PatSnap generates 50% of its revenue from China
“Now they have got 50% of their revenue coming from China, and to Jenny's point, China's playbook, totally different from everything outside China.”
Sabuncu: VCs scrutinize software vs. services revenue deeply by meeting two
“And if you try to build your narrative and come to a SaaS VC, I think at least in your second meeting, you're gonna go deep into the, what is repeatable? What is service? Who are you selling to? Is this really SaaS?”
Yuen: Southeast Asia SaaS excitement requires a massive IPO or M&A exit
“I believe that once if we have got a very strong exit via IPO or M&A and if people have indeed managed to sell the company at a way higher price tag, we will start seeing excitement in this vertical.”
Sabuncu: Southeast Asian SaaS startups must target developed markets for venture scale
“I think you can absolutely start a SaaS business out of Southeast Asia. But, and you can sell to great companies here. They can be your first users. It's great, like founder to founder sales. But close to series, again, depends. You need to keep your eyes out …”
Lee: Pure software enablement models fail globally across emerging markets
“Enablement doesn't work globally because the stage of development of the development community is very different.”
Carmen Yuen: Most Vertex SaaS portfolio companies have services revenue
“Most of our SaaS companies have certain elements of services revenue.”
Lee: VCs use post-term sheet legal negotiations to diligence the CEO
“From an investor point of view, a term sheet sign is not a deal done. We continue to do our due diligence up to the last day, and the entire negotiation process with a founder on the terms is a, like the most revealing of all due diligence”
Lee: GGV has walked away from deals over protracted legal negotiations
“We have been known to step away from a deal, because through that negotiation process, the only the lawyers are making money, because the clock keeps going, the turns keep going, and I'm like, three million deal, they're gonna spend half a million on legal?”
Lee: Series A legal fees should normally be under $50,000
“You can get a deal, series A, Less than 50 K is the norm. If you're paying more than that, something's wrong. Maybe 20, 20 K is what we see if there's no restructuring, right?”
Lee: Tracked one startup from Series A before finally investing at Series E
“I've tracked companies for five years, and the entire team knows me from A to E, and I only came in at Series E.”
Sabuncu: VCs use internal CRMs to track if you pitched another partner
“Like many other companies, VCs also have their own CRMs. So, if you meet an analyst or another partner, and if the answer is no, and if you go to another partner and don't give that context, the other partner, the chances of that other partner knowing that you…”