I think what alarms everyone is when there are too many startups funded with > $10m-$20m in venture capital, without a true break-out leader.
As soon as you have 4–5 competitors in a space, each say less than $10m in ARR but each very well funded, things get a lot harder:
- CAC goes way, way up
- An arms race in burn rate begins
- Unit economics get nutty
- Mini-brand and brand building gets harder (and again, a lot more expensive)
In SaaS, once you are past ~$15m-$20m in ARR, you have “broken out”. And if there are multiple players past $20m in ARR, that generally means either each is strong in a different, large segment … and/or the market is so large it can support multiple IPO outcomes.
But tons of venture capital in a specific product segment with 4–5–6+ players with < $5m ARR?
Too much hype, too much roadkill to come.
