After $10m ARR, every VC in SaaS comes to the same conclusion
So interesting that they don't even at $4m-$5m ARR though
— Jason ✨BeKind✨ Lemkin ⚫️ (@jasonlk) September 24, 2021
In this era of unprecedented unicorn production and public SaaS multiples, where it looks like every Series A on TechCrunch is $30m+, it can seem like getting venture funded must be easier than ever.
Let’s be 100% clear on two things:
- Almost all the money is going into obvious startups. The ones already winning, or starting to with proven teams; and
- There are 10x more SaaS startups than just 24 months ago. So VCs have even less time to work on non-obvious ones. Yes, there is so much more money in venture. But there are even more startups.
So just one simple point: raising almost infinite venture capital is the easiest ever in the history of time — once you are obvious.
What if you aren’t obvious? What if your space is boring? Your team unproven? Your growth good, but unevent?
You’ll still struggle even today.
Until … maybe even until $10m ARR. That’s the converge point in SaaS. Where Series B/C/D/E investors no longer really even care what you do. They care about ARR, growth, NRR and capital efficiency. That’s really it.
Get to $10m ARR, growing 100%, with 110%+ NRR, and you’ll get plenty of funding at a great price today. And if that’s far away, I hear you. But you’ll get there.
But that doesn’t mean you’ll be “Obvious” even at $4m-$5m ARR. You may struggle to get even 1 term sheet, even then.
It’s OK. They’ll look back and regret the deal they lost once you cross $10m ARR.