The Latest from SaaStr: Capital Efficiency is Back in Fashion

So with the whiplash from the public markets falling more than 50% in 2022, and venture markets in turn basically freezing up in the later stages, focus turned away from growth to cash conservation.  

And to capital efficiency.

The same happened in the public markets, as everyone suddenly had to march toward profitability faster.

But … it’s not a free lunch.  Just cutting costs but not growing doesn’t work outside of very short windows.

So how fast do you have to grow, even with less capital, and a need to be more efficient?

Here are the things IMHO and IME that are most important.

First, if you want to do it right, you should diligence both (1) the firm and (2) the individual partner leading the deal.

Importantly, these days, more and more established firms aren’t able, or choose not to, raise another fund.

And these days, more and more partners with “hot hands” leave and start their own firms. The bull run and hot hands have created 600+ new funds since 2015. Most of these are started by folks that used to work at other, more established firms. If the partner leading the deal leaves the firm to start her own, this can leave your investment as an orphan, which can be a significant disadvantage.

So I’ve been investing since 2013, and have done fairly well.

Some of my top investments at seed stage include Pipedrive, Salesloft, Front, Talkdesk, Algolia, Gorgias, Greenhouse and more:

The goal for SaaStr Fund is to invest in 2-4 of the very top seed / late seed startups from $10k-$150k in MRR.

Earlier than that is too early for us to see it; after that is a bit too late.

We write checks from $750k-$4m and ideally lead the round.

So this last year was one of so much change.  Change at a pace we haven’t seen since 2008, when the world of SaaS was just so, so much smaller.

Just 12 months ago, Bitcoin was at near-highs, as were many SaaS stocks, and multiples.  

And then … crash.

The SaaS public markets fell -52% in just one year.  Venture fell even further, even if mark-ups in many cases weren’t taken.  Interest rates and inflation exploded out of nowhere. 

But it’s worth remembering just 2 things.

“Overcharge” if the customer is big, i.e., >$50k-$100k a year or so in deal size.  At least, charge more than your gut likely tells you to.

Undercharge if the customer is small by revenue.  Charge less than you want to, and probably, a smidge less than the more low-end competition, or at least not more.

Why?

To learn.

So the amount of great content we have on our YouTube just exploded the last 2 years, as we started doing big digital events, and several great new offerings like CRO Confidential with the best CROs in SaaS, and our new Workshop Wednesday with leaders from Stripe, Airtable, Battery Ventures, Openview, and so much more doing live sessions with Q&A.

Here’s what folks most watched in 2022.

So 2022 marked SaaStr’s 10th anniversary, from our first blog posts in August and September 2012.

It also marked our first year with 1,000,000+ years of our blog, up 16% from last year.

Now, SaaStr has changed a lot over the years.  Our IRL and digital events attracted over 50,000 attendees in 2022.  Our podcast quietly has become the #1 most downloads in SaaS.  We have over 15,000 founders and execs on SaaStr University.  At the same time, some channels that founders used to connect a lot on, like Quora, have declined.  But thanks in large part to the magic of SEO and our newsletter, the SaaStr Blog continues to grow.

If you've missed any of our 2022 Workshop Wednesdays, catch up here!

We've had

• Airtable
• Snowflake
• Battery Ventures
• GitLab
• Airtable

All join us for 45-minute, completely live, interactive sessions with the SaaStr community. These workshops have been a hit, and we're thrilled to say we're continuing them into the New Year.

Kicking off Workshop Wednesdays in 2023 will be Sarah Breathnach, Head of Demand Generation and Field Marketing at Hunters. She'll be sharing Why Hiring a Marketing Team to do Lead Generation is a Big Mistake.

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