FiscalNote Holdings, Inc. (NOTE)

FiscalNote’s founding in 2013 reflected a simple observation: large organizations spend billions annually on government relations — tracking legislation, understanding regulatory changes, and influencing policy — but they did so using fragmented, outdated tools. Most relied on binders of printed legislation, email alerts from government-relations consultants, and manual spreadsheet work. No single platform aggregated real-time legislative data, provided analytics on bill progression, or connected the dots between regulatory activity and business impact.

The founding bet and early product

The company was built on the premise that software could consolidate government affairs into a platform that corporations, trade associations, and lobbying firms would pay to subscribe to. The initial FiscalNote product tracked federal legislation and regulatory activity, allowing users to set alerts for bills or rules affecting their industry or business interests, analyze voting patterns, and understand the network of elected officials and staff involved in specific legislative areas.

This was a classic software-as-a-service (SaaS) opportunity: once built, the software could serve many customers with minimal additional cost per customer, allowing for high gross margins and predictable recurring subscription revenue. The addressable market was large — any corporation with meaningful federal or state regulatory exposure has need for this intelligence. And the product was sticky: once a customer built workflows around the platform and integrated it into their government-affairs operations, switching to a competitor was disruptive.

The early years were typical of B2B SaaS: the company raised venture capital, focused on product development and customer acquisition, and accumulated losses as it invested in growth. The customers were initially government-relations professionals, lobbying shops, and large corporations with active policy teams. Each customer paid annual subscription fees, creating a growing base of recurring revenue that compounded over time.

Expansion and M&A

As FiscalNote matured, the company pursued two growth strategies: organic expansion of the product and acquisitions of complementary government-affairs and public-data companies. The acquisitions gave FiscalNote access to new customer bases and new data streams. By combining legislative-tracking software with acquired databases of political donations, regulatory filings, and policy networks, FiscalNote transformed from a single-product platform into a broader government-intelligence ecosystem.

These acquisitions also allowed the company to serve adjacent markets: public-affairs professionals in non-profits, state and local government agencies, and policy research organizations. The broader platform could serve more use cases and defend against competitors by offering a more comprehensive solution.

Going public and the SaaS market cycle

FiscalNote went public in 2021 (through a SPAC merger) in the midst of a period of robust appetite for SaaS companies. The public markets were valuing SaaS businesses on the basis of recurring-revenue growth, customer acquisition efficiency, and the path to profitability. FiscalNote, like other SaaS companies that went public in that era, benefited from strong investor enthusiasm for recurring-revenue models and the durability of SaaS margins.

However, SaaS valuations in 2021 reflected very optimistic growth assumptions, and as interest rates rose and investor sentiment shifted in 2022–2023, SaaS companies that had been trading at high multiples experienced sharp repricing. Companies were suddenly evaluated more on near-term profitability and cash flow rather than on long-term growth potential, and the valuation multiples applied to recurring revenue fell substantially.

The business model: recurring but concentrated

FiscalNote’s economics are those of a classic SaaS company: customers pay annual subscription fees for access to the platform and data. The gross margins are high (software costs little to reproduce for additional customers), and the business is not capital-intensive. The customer acquisition cost (the money spent on sales and marketing to win a customer) must be recovered over the customer’s lifetime value (the total profit the customer generates across their subscription life).

For FiscalNote, this math depends critically on customer retention and expansion: do customers keep renewing, and do they expand to additional users or ancillary products as their policy teams grow? A high retention rate and strong expansion revenue make the unit economics work; a low retention rate means the company must constantly spend on acquisition to replace lost customers, pressuring profitability.

The customer base is concentrated in large corporations and large lobbying firms — organizations large enough and wealthy enough to justify hundreds of thousands of dollars in annual subscription cost. This creates a hit-driven dynamic: losing a single large customer has outsized impact on revenue and profitability. Conversely, winning a new large customer can materially improve results.

The regulatory and competitive landscape

FiscalNote operates in a market where customers have genuine need for government-intelligence software but where no single player has completely dominated. Competitors include both legacy lobbyist-directory and legislative-tracking companies and newer SaaS platforms focused on specific aspects of government affairs. The competitive position depends on data quality, user interface, integrations with customer workflows, and brand trust among government-relations professionals.

Data quality and completeness are critical: if FiscalNote misses important legislative developments or regulatory filings, customers will supplement it with other sources or switch. The company must continuously invest in data infrastructure and machine learning to extract meaning from legislative text, regulatory filings, and public voting records.

The market is also exposed to policy changes: if campaign-finance rules change, disclosure requirements shift, or legislative processes themselves evolve (e.g., if the use of AI or automation in legislative drafting accelerates), the value proposition and data requirements for FiscalNote’s platform could shift. And the customer base’s willingness to spend is exposed to their own business cycles: when corporations are facing cost pressures, government-affairs budgets are often the first to be cut.

From growth to profitability

Like many SaaS companies that went public in 2021, FiscalNote faced pressure to demonstrate a credible path to profitability in 2022–2023 as investor appetite for pure-growth stories evaporated. The company had pursued aggressive growth and acquisitions, taking on debt and operating at losses. Shifting to profitability required either substantially accelerating revenue growth or cutting costs, or both.

This inflection — from a growth-at-all-costs playbook to one balanced toward profitability — is common among SaaS companies in their public-company life. The company must maintain customer satisfaction and retention while reducing overhead, demonstrating that it can grow efficiently and convert revenue into actual profit. The success of this transition determines whether the company becomes a durable, profitable software business or whether it struggles with high costs and customer churn.

Cyclicality in government-affairs budgets

FiscalNote’s revenue is ultimately dependent on whether corporations, lobbying firms, and policy organizations have the budget to spend on government-intelligence software. During periods of political uncertainty or regulatory intensity — when there is significant legislative activity, potential regulation, or policy changes relevant to customer industries — government-affairs budgets are robust and spending on tools to monitor and influence policy is justified.

During periods of regulatory quiet or when corporate attention is directed toward other issues (cost control, inflation, supply-chain management), government-affairs budgets are compressed. Economic downturns typically squeeze all discretionary corporate spending, including government-relations. And changes in political leadership or legislative control can shift the perceived importance of monitoring policy and influence for particular customer sectors.

Assessing the investment case

The 10-K filing (SEC CIK 0001823466) breaks down revenue by customer segment and geographic market, details customer concentration, and describes retention and expansion metrics. The strength of the business hinges on whether the company can maintain high customer-retention rates while keeping customer-acquisition costs reasonable, whether large corporations continue to value government-intelligence software as a critical tool, and whether FiscalNote can achieve profitability while maintaining growth in a market where spending on government affairs is cyclical and concentrated among large organizations with substantial policy-influence budgets.

The company’s trajectory from scrappy startup to public-company SaaS platform to profitability-focused mature business mirrors the broader experience of the SaaS sector in the 2020s — a period of exuberant growth followed by a severe repricing and forced reckoning with the discipline of unit economics and sustainable business models.