Inc - The Quiet Liquidity Crisis in SaaS

So Thomasz Tunguz put together a great chart summarizing one of my top worries over the past 24+ months in SaaS. He summarized the M&A (acquisitions) of The Top 10 Software Acquirers.

And what you can see is there is really almost no liquidity for startups and scale-ups in SaaS and Cloud at the moment. And there hasn’t been for a while.

It was great times for SaaS liquidity in late 2020 through the end of 2021. 

Epic times.

In SaaStr Fund alone, we had billion+ cash exits in Salesloft ($2.4B), Pipedrive ($1.5B) and Greenhouse (almost $1B), among other deals.   And 2021 was a record year for Saas IPOs.  And VCs didn’t care if they got secondary shares (buying them from others) or new primary shares, so there were a ton of employee tender offers and buy-outs going on.  Liquidity was everywhere. It really was.

A big thanks to those who have already locked in their super duper early bird tickets to 2025 :)!

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So Ramp has its latest Top SaaS vendors on Ramp out for October 2024.  Ramp covers a ton of spend but it is fairly tech focused in its customer base, so there’s a bias there. But no matter what, it shows what its customers are sepnding billions on.

And what are the Top 5 apps for its new customers? The same ones as it’s been for a while.

HubSpot, Carta, ZoomInfo, Zoom and Slack.

Now Ramp does also track break-out vendors.  The biggest percentage change is a mix of cool new names (Cursor, Flow.ai, Replit) and a revival of some classics (Mailchimp and Parallels).

Still, a reminder the Giants of SaaS today are still … well … the Giants of SaaS.

Go up against them, for sure. But don’t discount them.  Not yet.  Not today, at least.

Every year, Bessemer Venture Partners releases a State of the Cloud report. This year, it’s all about AI, which is why Sameer Dholakia, Partner at Bessemer, calls it the Cloud AI Era. Four portfolio companies join Sameer to talk about three trends of the Cloud AI Era.

• AI foundation models
• Multimodal models
• Change management

Julia Chapin, COO at Abridge, Kate Jensen, Head of Revenue at Anthropic, Rami Karabibar, CEO and founder at EvenUp, and Timothy Young, CEO at Jasper, share insights into this new wave that is changing everything about how we live, work, and buy.

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

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0%.

I think $1.5m ARR is too early for an experienced COO in 95 cases out of 100 — unless it’s a total rocketship and you plan to be at $10m+ ARR within 12 months.

At $1.5m ARR you should still be the COO.

You should find, hire, and manage the VPs of Sales, Marketing, Customer Success, Product and Engineering and even Finance yourself.

At $8m, $10m, the operational side of the business may be so complex a COO makes sense.  We can all use a COO a bit earlier these days. A bit earlier. Like $10m ARR.

Today, the main operational challenge you have an Initial Traction is hiring great function VPs.

Go find them.

And stop wasting time on an idea of a magical “COO” too early.

We are gearing up 10,000+ at SaaStr Annual 2025 on May 13-15!!  And more details on SaaStr Europa 2024 in the Fall of 2025 soon!  Yup, we’re back earlier in the year for Annual where we used to be, so everything will move a bit faster this time.

And speaker submissions are now OPEN.

1/ You probably have 50+ sellers at $50m ARR. You probably need half of them. 

That’s tough but true. Cut anyone below mid-pack. Concentrate leads in those that close the best. Especially when growth slows, you almost always do better concentrating leads in your top closers. Later, this robs folks of a chance to grow, learning, train and scale.  But in the short-term, concentrating leads in your top closes always gives you a boost.

2/ Sell harder — but sell to a tighter ICP.  Just sell to your core ICP, where you have the highest win rates. This isn’t a great option, but it’s the fastest way to get to break-even. 

You conserve cash when you stop selling into segments that are harder to sell at. Because those segments are more expensive to sell into. You retreat from Dominant Strategy to Only Sell Where We Win. This is much, much, much more efficient. You can drop every segment where you aren’t #1 vs. the competition. This begins a slow death spiral for growth, but it does work. If you just do it for a quarter or two, it’s probably not the end of the world.  But growth will slow.

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