No, It’s Not Any Harder to Get Funded Today

So many on social media are lamenting how much harder it is to raise venture funding today than it used to be. And the data nominally suports it.  Statistically, raising a Series A is 2x as hard or harder than it was in 2021.

But that doesn’t really mean it’s harder.

We’re confusing two things.

First, the bar to get venture-funded in B2B / SaaS has basically always been the same my entire career. T3D2 or better. Or if you are < $1m ARR, some reasons to believe you are on that track.

Triple, Triple, Double, Double. Or Better. That’s always been the bar to get funded in SaaS.

I.e., going at least from:

• $1m to $3m ARR one year
• $3m to $9m ARR the next (hard)
• $9m to $18m ARR the year after
• $18m to $36m ARR the year after that

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

Register for an exclusive expert Webinar on Building Scalable Controls for SaaS companies.

Unfortunately, this is a little more common than you think. Maybe even more common today than a few years back, as VC rounds and especially seed rounds grew in size, and oversight and controls to some extent took a back seat.

The very best CEOs never “take money from the company” in my experience.

But I’m guessing in at least 5% of venture-backed start-ups, some founder does something wrong here.

What data and metrics do you need to convince SaaS investors you’re in good shape and aligned with what they care about?

Christoph Janz, Partner at Point Nine Capital, shares 5 key insights during this year’s SaaStr Annual.

These metrics are more targeted to those preparing for a Series A or B round and could make the difference between an excited-to-invest-in-you investor and a pass. Why should you spend the time getting your act together before fundraising? If your data is self-explanatory, in good shape, easy to understand, and aligned with what investors care about, you avoid a lot of unnecessary back and forth.

Less time clarifying what your metrics mean results in more time to talk to more investors in parallel and increased confidence with each of those investors.

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

It’s a pivotal moment for the customer service industry. Join 1,000+ CX professionals at Frontlines on October 8th to learn how to foster a customer-first company culture and leverage AI to grow your business.

Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.

So whose doing well in SaaS today — with almost no “macro” impacts?  Folks that sell to the end economy in the U.S. Like Samsara. Powered by the overall strength of the U.S. economy, by shipping, by trucking, by industrial applications and more … there’s no downturn at Samsara. It hasn’t missed a beat:

• It’s at $1.26B in ARR
• Growing 36%
• $24B Market cap, so almost 20x ARR (wow)
• And cash-flow positive (4% FCF Margins)

That’s about as good as it gets.

Every year that I think about it, the top 3 sort of change.

But my Top 3 mistakes I made as a SaaS CEO:

• Not constantly hiring, especially for VPs. You need to spend 20% of your time doing this. I hunkered down too much, tried to do too much myself, and let key roles stay vacant for too long.  I’m still making that mistake to that day.  The best CEOs are constantly recruiting.  Forever.
• Not “forcing” the team to be more enterprise. I’m not much of a micromanager, but we blew a few key enterprise opportunities because the engineering team didn’t want to do certain things in the enterprise playbook. I should have micromanaged a few key opportunities that were “make or break”, or close to it.  I needed to be more hands-on in a few critical deals when the team needed to be … pushed more. If your engineering team doesn’t natively embrace building “enterprise stuff”, you just gotta find a way to push harder here.
• Not understanding the playbook, especially after $4m-$5m ARR or so. Not understanding when you become unstoppable. Maybe not finding good enough mentors. This is why I started SaaStr, but in any event, I didn’t understand that SaaS companies that reach $8m+ in ARR, growing 80% or more with net negative churn are basically unstoppable. Now I know 

© SaaStr 2024

644 Emerson St. Suite 200, Palo Alto, CA, 94301

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