Inc - Is SaaS Back?

So it was just 8 months ago we wrote “Is SaaS Dead?” and the post not only took off, it summarized a zeitgeist, a malaise, a feeling across much of B2B at the start of 2024. 

That SaaS was Dead. A combination of AI and buyer retrenchment had killed it.

What a difference 8 months makes.  

It’s not 2021 again, but so much has changed for the better as the year ends.

This edition of the SaaStr Weekly is sponsored in part by G2

In today’s landscape, AI isn’t just a tool—it’s a business imperative.

Join C-suite execs, including SaaStr CEO and Founder, Jason Lemkin and GTM leaders, as they explore:

• Accelerating your growth with AI
• Exceeding buyer ROI and agility expectations
• Capitalizing on market trends to stay ahead of the competition 

In my experience — Yes, probably. As a founder, you can back out of a term sheet if something is off, or even if you just get another offer you prefer.

There is a lot of drama around broken term sheets. Mostly around VCs backing out, not founders, though.  VCs backing out of signed term sheets is fairly rare for well known, traditional VC funds. But fairly common from non-“Sand Hill”/SF-style investors who often don’t see a signed term sheet as a full commitment to close.

Here’s the thing — term sheet are term sheets. That’s it.

95% of the time, they are non-binding statements of intent. For both sides. They may imply more, but they are non-binding in almost all cases, at least legally.

Is it considered bad form to bail on a signed term sheet? Yes. For both sides. No doubt.

I’d like to think reputations get damaged over these things. But they don’t. All of the bad VC behavior I know of, 95% of other founders don’t care down the road, or at least, don’t bother to do due diligence. So few founders really do due diligence on VC firms.  And most VCs are fine stealing a hot deal from another VC fund.  They try to do it all the time, in fact.

I backed out of an unsigned term sheet once as a founder/CEO. Note I said unsigned.

Why? Well, the “lead” VC gave me a significantly lower valuation than we’d orally agreed. And tried to force us to take on a second investor we didn’t want. And wanted control of the board.  We’d talked about 20% dilution, and because of this, in the end the unsigned term sheet they gave me was 40% dilution and 3 out of 5 board seats. So I said no, and found another investor.

Up Next: Wednesday, December 11th @ 10AM

Topic: How to Train Your Sales Leaders: Why Frontline Sales Managers are Crucial

Speaker: Michelle Benfer, former SVP, Head of Revenue at BILL and Operating Partner, GTM at Francisco Partners Consulting

Workshop Wednesdays is our weekly 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.

We’re just beginning to slot speakers for 2025 SaaStr Annual, May 13-15 in SF Bay!! More to come later in the year, but already look forward to incredible, unique deep dives with CEOs of Snowflake, DropBox, Descript, Flock Safety, and 100s more!

In advance, we wanted to take a look at some of our Fan Favorite speakers. David Sacks spoke at SaaSr Annual #01, and #10, and 3 other times between! You may have also seen he’s recently been named AI + Crypto Czar.

#1 Lie. That it will get easier.

• You get better. You constantly learn, and in not that long of a time, become one of the experts in your space.
• At some point, you stop being at risk of going bankrupt. This does let you breathe.
• At some point, you have a brand, and that makes your growth more predictable. Not easier. But more predictable.
• At some point, you have a great team, or at least part of one. You don’t have to do it all yourself anymore. It doesn’t really get “easier” here because now you have to spend 50% of your time recruiting. But a great VP or 3 can finally own some of the core goals and functional areas.
• At some point, your product isn’t terrible anymore. You will never be satisfied here. But it’s nice when the basic core product finally is sort of great.
• At some point, you are in control of your destiny. It’s not any easier then, too. But then, at least you aren’t dependent on a partner, a VC, or anything external.

It never gets easy, but it can get less difficult:

#2 Lie. That you get back that family time.

You never do.  You get better at managing your time, and having a bigger team lets you set some more boundaries.  But if your startup takes off, one way or another, it will consume most of your mental energy.

#3 Lie. That you can always walk away and do something else.

The great CEOs can’t. If this comforts you in the early days, though, OK. But once you’re really in, you’re in. Often, for at least 5-7 years.

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

Download the guide to learn the key factors that'll help you decide whether building or buying native integrations is the best option for you.

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. We’ll do an announcement of the first wave of speakers soon, but it’s already an epic list. From the CEOs of Cloud Giants Snowflake and DropBox, to top vertical SaaS CEOs at unicorns Flock Safety, Clio and more, to the CCOs of Canva, GitHub, to 20+ top AI founders for our 2nd Annual AI Summit, and more, it will be epic.

Because, while risky and more expensive, betting on repeat founders works. It doesn’t necessarily work better. But importantly, it does work. (And most things in venture don’t really work.)

The HubSpot co-founders, for example, had $100m exits the first time.  HubSpot was their second one. Today, it’s worth almost $40 Billion. As Dharmesh Shah co-founder and CTO notes in the SaaStr Annual deep dive below, the second time … they just really wanted to go big.

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