So now is an odd time for SaaS startups:

  • The best are growing faster than ever.
  • It looks like unicorn rounds are still being announced almost every day.
  • VC funds are flush with more cash than ever before.


  • It seems like half the VCs in the world are saying the sky is falling.

What’s going on?

It’s not that complicated, but it is hard to tell from the outside.  Basically three things are happening right now, which makes the announcements in the press and Twitter and LinkedIn confusing:

  • Seed funds grew 20x in the past 2 years and are still mostly investing like it’s 2021.  Raising a seed round has never been easy, but most seed funds are still investing at a fast pace.  They have a lot to invest and valuations only change so much as seed.
  • But, everything from Series A on has slowed down.  Sometimes, way down.  Due to everyone settling in and dealing with the fact that public multiples have been cut in half.
  • Later stage VC funds and funds holding public shares have often seen their own valuations cut 30%-50% in the past few months.  They’re no longer feeling like high fliers.
  • And, most of the mega-rounds you see on TechCrunch, etc. were in process or even closed before February 2022.

So it’s strange times.  Aside from certain segments still dealing with a “Covid overhang” (e.g., digital events, Zoom, etc.), customers are buying more SaaS than ever.  But with stock prices in the public markets for SaaS down 50% from their peaks in many cases, it seems much harder to make money in venture than just a few months ago.  Much harder.

Most important for founders to understand is the venture “crunch” right now is everywhere except seed.  If nothing else, if you’ve recently raised a seed round, assume it’s much harder than people thought last year to get that Series A.  And if you are a little later stage than that, be aware it’s just plain harder.  Especially, harder to get a valuation that’s a lot higher than the public comps.

Be aware the data we see on Crunchbase and other sources and in most press releases and announcements is still a quarter behind here.  The deals closing now, in Q2 ‘22 and late Q1 ‘21 that are Series A, B, C, D, and beyond are far fewer than before.

Series A+ investors have tapped the brakes, as VCs like to say.  It won’t last forever.  But it looks like it will last a while.

Crunch image from here.

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