10 Steps to Improve The Odds You Get Funded

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

I can’t magically change your growth rate. I can’t magically turn you into the hottest Gen AI start-up out there. But I can help you at least increase the odds that when you do look for VC funding, you get it. By avoiding … unforced errors.

Hey SaaStr Community,

Happy holidays from Team SaaStr. 

We'll be back for the biggest SaaS event of the year, next year in May of 2025. 

This is your chance to hit your goals next year and experience the biggest SaaS gathering in the SF Bay Area and the 11th SaaStr Annual. We'll bring together 13,000 of the best SaaS Founders, CEOs, Revenue Leaders and VCs for 3 days of content with over 150+ expert SaaS speakers, 100s of workshops from the top CROs and revenue leaders, and endless opportunities to network and meet in-person. See you in 2025!

Yes, they are leaving.  But they may still come back.  And even more likely, if you treat them well, they still may tell others to use you.  

So — do whatever is best for the customer.

It’s incredibly frustrating when a customer cancels, especially, one you’ve put a ton of work into.

But the thing is, it’s not necessarily over. Sometimes, you do get them back. At least once in a while:

• Sometimes, you get them back directly. I.e., in 6 or 12 months, or even later, they sign up again. Business needs change. Things change.
• More often, you get them back indirectly. Your buyer, your champion leaves to another company in a similar role. And there, she buys your product again.
• Or they may at least down the road recommend you to someone else looking for a product in your category.  At least as one of the Top 2 vendors.  That alone can get you another deal.

But this only happens if they had a great experience — including on the exit.

It takes 7–10 years to build something in SaaS. Go long. Take care of your customers at every stage. Include the stage where they leave. It will pay dividends in the long run.

So for a while, it did feel like SaaS was dead in VC.  Somewhere from March 2024 to October 2024 or so. The, the SaaS leaders started to re-accelerate growth, and their market caps in many cases went up 40%+ or more. AI was often the accelerant. And it’s clear now, at least for now, SaaS is back.

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

Stop letting your lack of integrations block deals and derail your product roadmap. Learn how to build a scalable integration strategy with this guide.

Founders tend to worry a bit too much about getting fired — and not enough about transparency.

Yes, it does happen. And sometimes, it’s very dramatic, see e.g., Travis Kalanik at Uber.

But most investors absolutely do not want to fire founders. Because:

• It usually increases risk. It’s very hard to find anyone that knows the business as well as the founders
• The vast majority of SaaS companies that IPO still have their founders as CEO.  More on that here.
• Most investors don’t have a better replacement at hand. If you are going to fire a founder, you sure better be able to source a better CEO. And ideally, have them on hand right now.

So generally, VCs only fire founders — assuming they have the legal / contractual rights to — when they are sort of forced to:

• Stealing
• Deep toxicity
• Sexism and other related issues
• Burning up all the cash with no ability to fundraise further
• Lying on important things

So have we made any real progress in diversity in SaaS the past 5 years?  The past 10?

In some ways, for sure yes. But we have a long way to go, still. A long way.

Per Carta’s latest data, only 18% of tech sales execs are women, and 26% of reps overall.

I’m slightly heartened that overall it’s at 26% women outside of the executive suite.  But still, it’s not enougjh.

Do you want a bro culture in your sales team? I know I don’t want one. And I don’t want to work in one. But if you don’t do something, it’s mathematically where you’ll end up.

For most SaaS apps, you want to at least start with “just right”, Goldilocks pricing:

#1. Too high a price, and you start to add friction to the sales process.

Deals take longer, leads shop other vendors, etc. That may be OK if you are the only vendor or in the space, or have the dominant brand. Sales may even push for this. But if you aren’t yet #1, you want to close every deal possible. So too high a price will dramatically increase friction, likely not enough to be worth the additional revenue per deal.

#2. But too low a price often also adds friction to sales, and if significant, leaves too much money on the table.

Today, the average SaaS customer has purchased 100+ apps. They are veterans. And because of that, they sort of already know what your app should cost. How? Based on comparables. Not necessarily competitors, but apps that provide similar amounts of value to similar users at their company. If they pay $10k a year for HubSpot, for example, and they see you as equally as valuable … they are probably OK paying $10k for your app. Maybe a bit less, since you are new. But at least $5k-$10k will be fine. If you charge way less, you may send a message your app is not as valuable as the prospect thinks.

#3. Once the deal size is > $5k-$10k, you do need to leave room for discounting.

Customers are going to ask for a discount on a $20k and up deal for sure. If you don’t allow some room, again, you are going to just add friction to the sales and buying process. The answer is simple: mark up your pricing equal to the average discount.

There are tons of exceptions here. But in the early and even middle days, approach pricing as a potential friction point for sales — but also an accelerator for sales.

#4. Get it just right, and more deals will close faster.

The faster deals close, the higher the % of deals that close. And the more money you make. Getting pricing right matters, but usually even more important is increasing sales velocity.

So in the early days, maybe just price your app at the low end of normal, or simply the same as similar apps. That will take one less learning step out of the buying process.

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