The message in 2022 was to keep going. You couldn’t raise at 27x ARR anymore because that era ended. Last year, the message was that it’s harder, so what is the theme for many SaaS companies this year? Just build. SaaStr founder and CEO Jason Lemkin shares his take on the current SaaS landscape midway through 2024 and what might be coming next in 2025 at the opener to this year’s SaaStr Europa.

There’s a lot of doom and gloom on social media, so it’s important to look at the facts as much as possible. Many people are doing great, even private companies like Netskope, which are growing over 30% at $500M in revenue. Canva is growing at 40% and has a revenue of $2.3B. So, yes, things are hard for some people, but companies are all over the place, and all you can do is keep building.

You can’t control public multiples, but you can control your competitiveness. You can control becoming more customer-centric, and you can keep building. Things ebb and flow, and if you keep your head in the game and increase your competitive position, things will come back.

The Three Worlds We’re Living In Today

“I don’t know if B2B2C and B2B2B actually exist, but I’ll use them going forward,” Jason says. B2B2C folks are selling to the real world, not tech companies, and they’re doing pretty good.

The three worlds are:

  1. B2B2C
  2. B2B2B
  3. AI

And then there are folks in impacted categories like ZoomInfo, where things haven’t really improved. And there’s AI. Jason tweeted WTF because many things are happening in AI, like 200x ARR rounds. This is warping a lot of what people think. A lot of the funding rounds for AI feel like 2021 again, but only for this subset of people.


The folks not selling to other tech companies are doing pretty well. You can see the list on the left-hand side of the above image:

  • Canva is growing 40% at $2.5B.
  • Toast is selling to restaurants and growing 32% at $1.3B.
  • Samsara is growing 39% at $1.1B.
  • Klaviyo is growing 42% at $750M, coming up on a billion in revenue, and number one in the Shopify ecosystem.
  • Monday is on its way to a billion in revenue, growing at 34%.
  • Zscaler is growing 32% at $2.2B.


B2B2B had a rough week a couple of weeks ago. MongoDB was down 23%, a great Cloud stock consistently growing in the 30s. They said they’ll only grow 17% next year. UiPath saw a huge drop of 30%. Growth is still good for them, but they had no net new customers last quarter.

Think how different that is from Canva or Toast. Then Salesforce lost $50B in market cap. What happened? They missed the quarter by a little and said they’ll only grow in the single digits next year. Why is that bad? Because if you have 115-120% NRR, you’re supposed to grow at least 15-20%. It’s a sign something is broken in the system.

Deals projected closing are taking longer and are smaller than projected. Deals are contracting, not because of layoffs, but because people are managing budgets so tightly. It won’t be like this every week, but the contrast to Canva is visceral.

It Takes Time To Bounce Back

Jason was the first investor in RevenueCat, a company that automates mobile subscriptions on your phone. 30% of all mobile apps with a paid subscription use RevenueCat to manage it.

Why is that interesting? Because they have over 10,000 B2B2C apps. That’s a pretty good slice of the mobile ecosystem. Consumer happens faster than B2B because you can cancel a subscription in 60 seconds vs. signing 3-year contracts with Salesforce.

What this graph shows is that there is no downturn in the mobile economy. It’s a rocket ship. An early thing Jason wrote on SaaStr is that B2B lags B2C by about two years. That still holds true today. If B2C rebounded back in 2023, that means 2025 might be a little easier for a lot of folks in classic B2B.

B2B2B Isn’t There Yet

Both HubSpot and Salesforce saw a bump at the end of the fiscal year, but it didn’t last. Even though HubSpot grew 23% at $2.5B, there was weaker demand and longer sales cycles, and they had to do pilots with CEOs and CIOs.

They’ve done well, but it’s not easier for them. HubSpots NRR has fallen to 100%, so to grow 23%, they must add 23% net new customers. In 2021, they had 110% NRR.

ZoomInfo’s tech NRR is about 85% right now, down from triple digits, and non-tech customers are still growing north of 20%. Folks are trying to figure out how to use less ZoomInfo through aggressive spend cuts rather than canceling outright.

Then, MongoDB lowered to 12% growth from 57%, and even though there isn’t more logo churn, people are trying to use it less to manage spend. It’s hard to believe this will last, though.

It’s 50% Harder Than Before

During an analyst call, Salesforce CEO Mark Benioff said they’re an AI company now, but it didn’t lift their revenue. He said around 18 months ago, they needed 2x pipeline coverage. So, for every dollar they wanted to grow, they needed 2x in their pipe.

It was 2x, and now it’s 3x, which means they need 50% more pipe to hit the same number. If Salesforce is experiencing this, you probably do too, if you’re in classic B2B.

Gartner Says SaaS Is Accelerating

Here’s where AI confuses everything. On May 20th, Gartner raised the estimate for the amount of SaaS spend this year. The chart estimates spend will grow 20% to $675B. If we’re adding 20%, where is the money going? To some extent, it’s not clear. “Maybe endless price increases,” Jason says.

A lot of it is moving to versions of AI.

You can see the growth on the platform side with Azure, Google, and AWS and how much it’s accelerating in AI. How does a startup benefit from this? Salesforce isn’t benefiting from it even though they’re building the applications. Dell fell 15% last week. So, it’s a little murky who benefits.

One thing we know is that VCs are all over it.

The Hunt for Riches

AI is where VCs are deploying, and it’s a hunt for riches. They’re deploying into three places:

  1. Seed
  2. Existing portfolio winners
  3. AI at 100x and 200x deals

Why could Elon Musk raise at $18B with no revenue and a brand-new product for xAI? Or Scale AI securing $1B. What’s going on here? If they’re the next OpenAI doing $2B in 18 months, that’s a bet you want to make. But you might lose on all the others.

Are brand-new companies that seem epic with no revenue really worth $1.5B in 12 months? Maybe if you have the ex-CTO of Github, but that’s still a super speculative bet. Why does 2024 in AI feel like 2021?

Jason surmises that in 2024, VCs have become decacorn hunters. In 2021, it was just unicorns. Zendesk IPO’d at $800M, and now it’s got to be $8B to get out of bed. Their Series A was $3M then. Today, it would be $30M or $50M. If everything’s 10x, the exits have to go up too.

So, VCs are looking for $10B exits, which puts a lot of pressure on folks, but it’s the only way a VC can make money. In AI, people will lose so much money on these deals when they’re permanently focused on $10B outcomes. “No one’s a dummy in venture, but they are making bets,” Jason says.

You Must Have AI Parity

No one knows what C3 AI does, but it’s been AI since the beginning and is down 45% this year. Being AI doesn’t necessarily lead to riches. As a founder, you must have AI parity with the competition, or you’ll lose deals.

Changing your URL and adding a slide may trick an investor or two, but it’s not enough to make you an AI company. Everyone that needs to be an AI company should be one. There is a hunt for riches, but people aren’t stupid, so it has to be real AI.

Where Is AI Budget Coming From

Where is this AI budget coming from? Some say it’s experimentation budgets, but that’s not really true. People say there are no AI budgets, only current budgets being repurposed. How do you reallocate your current budget? By cutting core apps or cutting back on extra products at Salesforce.

There’s no magical AI line budget, so stuff is being cut to fund these initiatives. A little is fear of being left behind, and most of it is based on huge efficiency promises. Look at Gorgias, the largest contact center in eCommerce, with about 16,000 Shopify customers and $100M in revenue.

They’re very SMB and just closed their first $750k TCV deal. How? It turns out that because of AI, they could lay off 400 folks in support. The human impacts are brutal, yet AI is positive for many companies that need more efficiency.

The takeaway is that you will lose the deal if you don’t have feature parity with your competitors.

IPO Market and Multiples Are Still Meh

There are a few things making everything harder, one of which is that the public markets suck on a bunch of levels. Multiples are low, and we’ve only had two real IPOs from really good companies. Everyone else is waiting, like Stripe, Plaid, and Canva.

This is a drag on every type of fundraising from Series A or later. It won’t last, but it is tough out there. There’s very little liquidity in the system, creating subtle stress. If you have to get to $600M, growing 50% to IPO, that’s an intimidating bar.

A simple way of thinking about multiples is that the median public SaaS company trades at 6x ARR. Some are struggling, and some are higher. The best ofs, like Samsara, are trading at 15x. This makes it hard for VCs to make money.

Things won’t get easier until about 8x, with a 20-30% reflation of multiples.

VCs Want To Invest, But There’s Stress In The System

As a community, we over-talk about venture capital, but it’s important if you’re fundraising and to understand the pulse of the system. Every VC wants to invest. On the left, you see the rolling IRR rates of returns for VCs.

In 2021, VC returns went wild. The real problem is thinking that 80% returns were here to stay. Real IRRs, when blended, are negative. It’s crashed since then.

Use Squarespace as an example. They’re going private in a $7B transaction but at $1.3-1.4B, growing 20-something percent a month. Going private is a sign of stress in the market.

Low multiples put insane pressure on public companies to be very profitable today. It’s too much. Salesforce is pushing toward 40% margins, but where will you invest if you can’t hire anyone? Public SaaS companies are in a quiet decay state because they aren’t hiring anybody, and there’s too much efficiency.

Everyone wants to deploy money, but there’s stress across the system.

Maybe Only 10-15% of VC-backed Startups Can Raise Another Round

Emergence got data from 600 venture-backed startups and redid the data to answer the question of how many are fundable based on the top decile. If you squint, this is the top 10% of all VC-backed startups by top-tier seed funds. How are they growing in today’s macro market?

From $1M-$5M, it’s 166% in the first group. From $5M-$20M, the best are still doubling, and after $20M, only 42% growth. VCs still need triple triple double double double to make money.

So, you have to be doing 166% in the first group, 100% in the second, and probably closer to 60% in the growth stage to be fundable. Maybe 10-15% of these top companies can raise money and meet the venture bar.

If you’ve raised a seed round, your next round will most certainly be much harder. Assume the next round isn’t coming, and ask your VCs if you’re fundable. Put them on the spot. Most startups aren’t fundable every single year, so don’t waste energy or overspend your cash if you’re not in this top decile.

Key Takeaways

  • Just build. B2B2C came back, and B2B2B will likely improve in 2025.
  • IPO and liquidity sucks, but some good ones are coming.
  • Multiples are meh, and fundraising is hard.

A lot of this you can’t control, so keep building. It takes ten years to get anywhere good in SaaS, so keep going and be better than the competition.

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