Hey SaaStr Community,

So raising VC capital has gotten a lot harder than it was at the peak of 2021 — when it was still hard for all but the best and more privileged.

But boy, it’s harder today.  

Everything has slowed down, the bar has gone up, and even VC funds themselves are struggling to do their own fundraising.

So I wanted to write a simple post, one that may be obvious to some, but it’s my #1 hack to increase the odds a VC invests in you.

The hack: Crush the current / next month, and send an immediate update on the 1st of that month.

When VC rounds used to get done in a week, your performance for next month often wasn’t part of the VC analysis.  Everyone thought they had to decide … quickly.

But now, meetings and evaluations and get-to-know-you’s are stretching over multiple calendar months (perhaps as they should).

My #1 Best Hack for VC Fundraising

So RingCentral is a quiet SaaS leader that has been around for a long time, since the early days of SaaS.  It’s built its way into an enterprise contact center leader and has now crossed $2 Billion in ARR, growing a mature but still steady 16%. 

And while it’s not GAAP profitable, on a non-GAAP basis, its margins are way up to 17%.

So what’s that worth in 2023?

Sigh.  Only $2.8 Billion.  RingCentral, with all that momentum and improved efficiency and margins, is only worth 1.3x ARR.  Now, RingCentral also carries significant debt, so it trades at more like 2x enterprise value.  But that’s still mighty low.

Revenue multiples are brutal out there for many.

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So 2023 is a unique time in venture fundraising.  We’re coming off a stretch in 2021 where VC capital hit crazy, record highs… and now is coming into multi-year lows.

It’s a time when SaaS and Cloud spend are also at record highs, and many Cloud leaders are still growing at strong rates … yet many startups have stopped growing at all.

And really worst of all is multiples.  

What public (and private) SaaS companies are valued at as a multiple of revenue.  They are at some of the lowest points of the past 7-8 years.  

And low multiples make fundraising hard.

 It hit late stage first, because it’s hard to do high valuation late-stage deals when the company would likely be worth less if it IPO’d today.  Then it hit Series B and C.  It hit Series A last year.  

And now, it’s finally hitting Seed.  Seed is slowing down last, but it is slowing down.  Especially as Seed VCs are getting more and more nervous that no one is going to write the next check anymore.

You can see here multiples are touching the lows of early 2016 and are even lower than 2015 and those early days of SaaS.  That’s … low.

And one problem I see is too many founders using a dated playbook for venture fundraising.

Let me just share 10 Simple Suggestions on How to Make Fundraising a Smidge More Successful in 2023.

So a recent SaaStr survey confirmed what I’ve experienced over the years:  outsourced SDRs are tough to make work. The idea is appealing, but hard to get right in practice.

It would be so great if we could all outsource sales, sales development, sales operations, and more. 

It really would be great.  It’s just hard in practice to outsource something you don’t already know well yourself.

Personally, I’ve seen it sort of work a few times — and that’s why I added “sort” as an option, and 26% of you also said it had sort of worked:

We used an experienced outsourced team at SaaStr itself to bring in new sponsors, and they added about 8% of new revenue.  Worth it, but the margins were lower than core customers, and it took up a lot of bandwidth.

I’ve invested in 2 startups that micromanaged outsourced SDR teams to some success.  They managed the resources, wrote the scripts, reviewed the lists, etc. Still, neither stuck with those agencies after 4-6 months.

This edition of the SaaStr Weekly is sponsored in part by Secureframe

Secureframe makes it easy to get SOC 2 compliant. With guided workflows and one-click integrations, the entire process is automated.

Can B2B sales ever be 100% automated?

Of course it can.

It is called self-service.

And with PLG the rage these days, folks are trying harder and harder.  Especially where budgets are reduced, and the next round looks far harder to close than it used to.

And it works great, up to a point. The question is, do you want to do better than that?

Do you want to sell deals much more than $299 / month? 

Prospects really want to a live human before putting much more than that, at least to start, on a credit card.

Do you want to close more of the potential seats / revenue up front?

If so, a sales professional will maximize the odds you sell a full solution to everyone. Not just a few to start. 

You’ll likely close more of the ultimate potential deal size up front with a salesteam.  And maybe, make sure the competition doesn’t grab some of the other potential seats and use cases.

In this week’s episode of CRO Confidential, host Sam Blond wraps up the founder-led sales series with one of the most accomplished sales leaders in the world, Brendon Cassidy.

Cassidy was Blond’s VP of Sales at Echosign and, before that, was one of the first sales leaders at LinkedIn. Post-Echosign, he was the first sales leader at Talkdesk, valued at $10+B. Cassidy is now a co-founder at CoSell, the relationship platform designed to organize your intro efforts. 

The point of CRO Confidential is to help startups acquire customers, and Cassidy provides a unique perspective on founder-led sales as a current founder and highly talented sales leader. 

So what secrets has Cassidy learned over the past decades of building businesses and acquiring customers? 

Let’s find out. 

Make is the leading visual platform for anyone to design, build, and automate anything—from tasks and workflows to apps and systems—without the need for coding skills. They are looking for a highly motivated and energetic Sales Enablement and Onboarding Specialist to join our Go to Market Strategy & Operations team. 

Notion is seeking a Commercial Account Executive who can Prospect and develop new potential accounts by educating contacts about how they can increase their team's collaboration, transparency, and productivity with Notion.

• SaaStr 661: VC AMA with SaaStr CEO Jason Lemkin and Black Mangroves MD Arnaud Bonzom at SaaStr APAC 2023
• SaaStr 660: CRO Confidential: 3 Secrets For Early-Stage Startups To Acquire Customers With CoSell.io Co-Founder & Co-CEO Brendon Cassidy

• SaaStr 659: The 9 Types Of CEOs VCs Struggle To Work With — With Founder and CEO of SaaStr, Jason Lemkin

Listen on Apple Podcast, Google Podcasts or Spotify

You're closing some of your best customers ever now:

- They had to really push it through procurement

- They had to really believe in the ROI

- They made a big bet on you

- They really, really want it to work

These ones, treat them well, they will stay a decade. Or longer.

Founders:

"Woe is me" is the absolute worst message to the team in tougher times

"It's my fault" is OK but it doesn't even help much

"Here's the plan" is what people want to hear

Folks that complain consume about 20x the energy of those that just get sh*t done

Simplify the team for 2H'2023

© SaaStr 2023

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