In 2023, you can be a pretty darn good SaaS company …
And still be 100% unfundable by VCs
In fact, maybe assume that's the case until you learn otherwise
— Jason ✨Be Kind✨ Lemkin (@jasonlk) April 15, 2023
So the funding platforms, law firms, and data sources that track venture all use slightly different data sets, and come to slightly different conclusions. But they all align on one thing: venture investments post-seed stage are way down.
The latest CB Insights data, I thought, summarized it the most elegantly:
- Deals were down to a 5+ year low, not just lower than the go-go days of late 2020 to late 2021, but down from every single quarter in 2019 and 2018, too. Deal-making is even further down than I thought.
- Dollars invested were also down to a 5+ year low. This is a bit less surprising, with public markets down 50%+, dollars almost have to be down at least that much or more. Still, it’s a big, big drop.
Carta’s data is slightly different but similarly sobering:
So if nothing else, founders, please reflect on the above. Especially if you just raised a seed round, and it didn’t seem that hard.
Way too many founders I talk to these days still think they will raise a “Big Series A” right after a seed round. And way too many founders are keeping a high burn rate up and assuming a Series B round will come.
It probably won’t, at least, not for now. Please just look at the hard data above.
Yes, VC deals are still getting done. Yes, every VC is back in the hunt, They just aren’t investing all that much. And the data above does have some lag in it. Deals that closed in Q1 were often from term sheets signed in Q4. There is some evidence things are picking up a bit now.
But don’t be overly optimistic when it comes to fundraising modeling, at least. You have to be realistic to not run out of money.
And … we’re at a 5+ year low for VC deals.