The Latest from SaaStr: VC Funding Hit a 5 Year Low in 2023

So the funding platforms, law firms and data sources that track venture all use slightly different data sets, and come to slightly different conclusions.  But they all align on one thing: venture investments post-seed stage are way down.

How down?

The latest CB Insights data I thought summarized it the most elegantly:

Deals were down to a 5+ year low, not just lower than the go-go days of late 2020 to late 2021, but down from every single quarter in 2019 and 2018, too.  Deal making is even further down that I thought.

Dollars invested were also down to a 5+ year low.  This is a bit less surprising, with public markets down 50%+, dollars almost have to be down at least that much or more. Still, it’s a big, big drop.

A long ways back, I was meeting with one of our largest customers, one of our first $1m TCV deals.  

As I was coming, someone else was leaving – Marc Benioff.

He’d come to … kiss the customer’s arse, as near as I could tell.  

The customer already had thousands and thousands of seats of Salesforce.  It wasn’t a sales call.  It was an in-person, fuel up the jet, arse-kissing call.

It did surprise me.

I mean, Marc Benioff doesn’t have to kiss anyone’s arse.  He’s a billionaire and the CEO of the largest vendor in all of SaaS.  And most importantly, he has people.  Lots of people.  Strong people.  Who can go do arse kissing for him.

So what was up?  

It took me a while to process.  Then came my first Dreamforce as a non-vendor, the first one I didn’t have to do booth duty in.  Which gave me time to reflect.

And then it became clear.  Customer events are all about maintaining (not creating, but maintaining) attitudinal loyalty (whether everyone realizes it or not).  Yes, sales reps will tell you they close the most deals of the year at Dreamforce.  But I think that’s really secondary.

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No, don’t resend.

First, VCs want to see strength. Not arrogance usually, but strength. Some whimpy email apologizing for some typos isn’t strength.

Second, it shows poor prioritization. This is really a good use of your time?

Third, VCs have lots of typos, too. They don’t even care.

It’s OK.

As we gear up for SaaStr Europa 2023 in London on 6-7 June and SaaStr Annual 2023 in the SF Bay Area on 6-7 September, we wanted to take a look back at some of our most iconic speakers and sessions from over the year, that we can still learn from today.

Today, Zoom is at $4B ARR. In many ways, it’s the same Zoom, albeit with a much more enterprise focus.

But at $100m ARR, Zoom was still a scrappy upstart. And importantly, it was burning just about $0. Yes, Zoom’s net burn was $0 in the run-up to the IPO. $0.

Eric Yuan, founder and CEO of Zoom Video Communications shared at SaaStr Annual 2017 how he and his team got to the first $100m ARR as well as his philosophy on running a company.

When a new head of marketing joins a start-up and the first thing they want to do is “refresh the marketing site”, I always quietly groan a bit. 

Look, a marketing site is important.  But don’t leads matter more? 

Shouldn’t improving the funnel be job #1 first?  Shouldn’t updating lead scoring, and lead routing, and so many other things come before a big “refresh the marketing site” project?  How about jumping in and helping the sales team as Job #1?

Well.  Yes, of course leads come first.  But these marketers aren’t wrong.

Because the good VPs of Marketing know something:  Your marketing site should be even better than your product. 

And when it is — you’ll move more leads down the funnel.  And close more of them.  Than you would with a mediocre website.  And since this upgrade really doesn’t require shipping any new features, fixing any bugs, or really needing anything from any other functional group … it makes sense to be a Top 3 project for a new marketing lead.  Because it will move the needle.

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The social contract between employer and employee in startups and scaleups seems to be in an evolving and weird state.

For most of my early career, folks rarely left if they were well paid, got promoted, had a good boss, and had a good job. Actually, only 2 folks ever left the Adobe Sign / EchoSign team we wanted to keep … in the first 5.5 years!

But tech was tiny back then, options were fewer, and IPOs even acquisitions were rare.

Things got bigger, and tech drew in a more mainstream crowd, and it needed to in order to scale. Not just the romantics and the pirates.

Those folks in many cases took a more transactional approach to jobs, switching for a little more money or a better commute. Turnover went up, but there was still a social contract: no layoffs if you can avoid it. Free lunches and perks exploded in this phase. Tech became more coddling, for better or worse. It was different, but everyone knew the new rules.

Then the Covid Boom of late 2020 to early 2022 changed everything again. The war for talent became a fevered global battle. Even mid-pack employees, reps who never hit quota but worked somewhere well known, etc., would get 3, 4, 5 higher paying job offers seemingly in a week. Folks stayed for shorter and shorter periods, productivity fell, and startups and scaleups became obsessed with just … hiring. No matter the downsides of how. 2 weeks’ notice became 2 minutes’ notice, if any at all.

Now 2023 has changed everything again.

Up Next: Wednesday, April 12th @ 10AM

Topic: 10 Things That Always Work in SaaS Marketing

Speaker: Jason Lemkin CEO and Founder @ SaaStr 

Workshop Wednesdays is new series where we’ll be bringing some of the best SaaStr speakers to you LIVE, every Wednesday. 

Each workshop will be hosted in a live, interactive 30-minute format at 10am Pacific each and every Wednesday. This workshop will be 100% LIVE, not pre-recorded, and will be hosted in an, interactive 30-minute format, including Q&A.

© SaaStr 2023

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