Debt is uncommon. SaaS companies have very little debt prior to going public. The median amount of debt was only $24mm. In our view this is more a function of VC wanting to invest more capital in strong performers versus banks unwilling to lend. Lenders are open to investing in SaaS businesses, but if a VC sees an opportunity to put more money to work and earn a return, they’ll do so. McAfee is the standout here, using $4.7bln of debt before going public, but note they were owned by private equity and are therefore not a fair indicator.
Net Capital before IPO is increasing. The companies are shown in order of IPO by year. The last 10 companies of the dataset are therefore the most recent IPOs, and they had net capital of $184mm on median. The first 10 companies have a 2019 IPO vintage, and had on median $143mm of net capital before IPO.