The Latest from SaaStr: Top Tier SaaS Companies Are Raising at 15x ARR. It Was 114x in 2021.

So there are a lot of rough armchair metrics for fundraising in SaaS in terms of valuations.  For years, the standard was “about 10x”. 

Top-tier SaaS companies would tend to raise at around 10x ARR, with ones with slightly lower growth often raising at 5x.

As SaaS picked up, 10x ARR remained a rough standard but for Series A, B and later rounds grew to about 15x for top performing SaaS companies.  In 2018-2019, it grew then a bit, and for very top SaaS companies, 20x ARR wasn’t uncommon for Series A and later rounds.

And then things just went crazy. 

Per Pitchbook and IVP, top-tier growth rounds had a 114x ARR ask at the very peak in 2021! Average asks and multiple for the very, very SaaS companies went up 700% in the Boom from late 2020-late 2021.  Whoa.

And then … came crashing back to earth.  

As the past few years have demonstrated, it’s wise to expect the unexpected, especially when it comes to hiring.

In particular, hiring for your sales team is critical in an uncertain economic outlook. Additionally, sales professionals looking for a new role should choose their next company wisely.

In this edition of CRO Confidential, Sam Blond, Partner at Founders Fund and former CRO at Brex, discusses the current SaaS sales landscape and tips for hiring in 2023 with guest Ben Braverman, Head of Flexport Fund and former Flexport CRO and CCO. 

Layoffs are brutal. In fact, I don’t think they generally ever should happen in SaaS.

Why not? The simple fact is if you have 110%, 120%+ NRR … then you >know<. You know then the next 6-8 months, within a range.

You should plan to that model.

Many of us got into trouble by not just hiring to the plan our “last 4 months” average growth model told us to hire to. Being overfunded can do that.

Having said all that, we’ve been through a time of dramatic change in SaaS. The pandemic radically changed buying patterns, and the reopening changed them again. In both cases, faster than anyone predicted. It’s whiplash and few of us could really keep up.

I have just one suggestion, one word of advice in this new world:

Go Out Appreciative.

It’s a lot harder than it was 12 months ago.  “Secondary liquidity” for founders is a fluid question and process.

Up until, say, 2017–2018 or so, in SaaS, there was a rough rule: a relatively small amount of secondary liquidity ($1m-$2m) would be offered by growth investors in top VC rounds once a startup crossed $10m ARR or so.

Generally, less than 10% of the total round might go to secondary liquidity. Get to say, $15m ARR, growing quickly, raise a round at a $120m valuation, and founders might each take $1m as secondary liquidity.

This all changed as venture markets for SaaS exploded from 2019-early 2022.

Secondary liquidity creeped into every hot round as a way for even Series A investors to win deals. It became common at the peak of venture craziness in 2021 for even $1m ARR rounds to have some significant founder secondary if the deal was way oversubscribed. And we saw a series of $100m+ deals for founder secondary in hot decacorns.

This coming Wednesday, Workshop Wednesdays continues!

And this upcoming topic is a can't miss one. 

Hugo's Co-founder, Simone Bartlett will be sharing How to Land Enterprise Clients at the Earliest Stages. 

Simone was a speaker at SaaStr Europa 2022, and this Wednesday, she'll be sharing how she landed top enterprise clients with a small team while still scaling Hugo in the early days.

Don't miss the LIVE workshop. Sign up for free.

SaaStr events couldn’t happen without our partners, and we wanted to give a special shout-out to some of our newest sponsors for SaaStr Annual 2023. At the 9th ever SaaStr Annual, ~200 of the best and hottest companies on earth will go BIG as partners/sponsors. Join these incredible companies to experience all the value of SaaStr!

Achieving sustainable growth in SaaS marketing is about balancing channels from a high-level strategy and a tactical point of view. Optimizing short-term gains with long-term investments and controlling customer acquisition costs (CAC) leads to more sustainable growth. It’s not enough to focus on one channel. Approach marketing as a whole, where all efforts can create something more significant than the sum of its parts.

Dave Gerhardt, Founder at Exit Five, Betsy Koliba, Head of Customer Growth at Demandwell, and Shauntle Barley, Director of Marketing at Demandwell, share strategies to compound channels for long-term growth by leveraging brand, SEO, and community to drive sustainability.

Your sales and customer success teams are losing deals and customers due to backlogged integration requests.

But can you really justify spending months of development on each integration, when an embedded iPaaS can help offload 70% of the work?

There are a lot of factors to consider in this build vs. buy decision, and it's all outlined in this guide.

© SaaStr 2023

255 Kansas, Suite 300, San Francisco, CA 94103

If you'd like to stop receiving the SaaStr Daily, click here