The Latest from SaaStr: $100m Rounds Have Fallen To Multi-Year Lows

So we’ve looked at a lot of great sources of data on how much tougher the late stage venture markets are now, and yeah they all point the same way. 

It’s a lot, lot, lot harder than 12 months ago to raise a Series A or late round.  And growth rounds are down 80%+ or more.

But this latest chart from Carta visualizes it in perhaps the most helpful way — around $100m rounds.  Forget about valuations and letters, let’s talk about money. 

How much money is coming into startups.

And Q4’22 was … terrible.  Not just worse than 2021, of course.  Not even just down 80% year-over-year.  But worse than any quarter in 2020, and worse than any quarter in 2019.

So a while back we did a deep dive on why 95% of the VPs of Sales candidates just won’t thrive at your start-up.  That doesn’t mean they are “bad”. 

Many, in fact, will thrive as a VP or Director somewhere else. 

It’s just they won’t make it at your particular, early-stage, quirky, pre-brand startup.

I think it’s important to repeat that analysis, but for your first few sales reps.  The ones you hire before your first great VP of Sales.  The ones you hire yourself.  Most of the ones you meet that seem good or even great may well be … but they won’t make it at your start-up.

Let’s list the reasons why a successful sales rep might still fail at your startup, even one with a great product.

Generally,  just track to the cash.

If a customer has signed a pre-paid annual or multi-year contract in exchange for a discount or other terms, then there’s generally no reason to return any pre-paid cash.

The contracts are generally not cancellable by their terms, and so you keep the cash.

In the end, cash + usage are key here.

So if cash isn’t pre-paid AND a customer stops using your contract … at a practical level, there isn’t much you can do.

Mike Wiacek, CEO at Stairwell, Mo Jebrini, CTO at Mashvisor, and Michael Ermolenko, CTO at Inworld.ai, discuss with Helene Ambiana, Global SMB and Startups Marketing Director at Google Cloud, how they overcame the hurdles of scaling and reached their goals. 

There’s a slide I see again and again from start-ups: 

2 of the early sales reps are at 100% of quota, sometimes 150%-200%. 

And 8 others? 10%-40%.

What’s happening here?

Are 2 of the first 10 reps really so much better as the rest?  Well yes, probably.  You’ll continue to see that over time to some extent.  The top reps will way outperform the average reps.  But not this much. 

So why so often, do only 2 of the first 8-10 sales reps perform?  And the others perform so poorly vs. the 2 that are doing well?

Almost always there is a strong correlation to No Training.

Harry Stebbings and I did an extra last minute 20VC this week on “WTF is Going on in Venture Capital in 2023” and it was a pretty honest and fun one.  About how investing is a bit broken now, and how VCs are dealing with fraud and more.

And how buying has changed in SaaS.

“Amazon”, “Salesforce”, “Google”, etc. don’t buy companies.

Executives do — to meet their goals at companies.

Either the CEO makes a decision (if it’s a Big acquisition), or an SVP does for a (relatively) smaller deal.

And they buy what they think the company needs — generally to fill a weakness.

Either a weakness the CEO sees in the coming years (e.g., Salesforce buying Slack, Facebook buying WhatsApp + Instagram), or a weakness an SVP has in her/his current plan (smaller M&A to hit the plan this year, or to fill a product gap the team couldn’t meet that has become important, or to tap into a trend they are way behind on).

This edition of the SaaStr Daily is sponsored in part by Brex

Brex is reimagining corporate cards and spend management to help founders get fast access to 10-20 times higher credit limits, unlimited virtual cards, a no-fee business account, and built-in software. 

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