champchamp

Certified Savage

Arsonist

Politicker

Acclaimed Answer

Funding drying up

Hey Savages,

I read this article today about funding drying up for startups, which is certainly not surprising.

However, it stated that Series D startups and beyond are the ones being hit the hardest.

I would've expected Series A startups to be the ones more affected. I'd think investors are now focusing on safer bets as opposed to just throwing money at everything and hoping one turns into a unicorn.

What do y'all think?

https://www.linkedin.com/news/story/startup-funding-starting-to-dry-up-5904330/ Startup funding starting to dry up? | LinkedIn Inflation, higher interest rates, the Ukraine war and economic uncertainty are hammering startup funding.

☁️ Software Tech

🏹 War Room

📳 SaaS

20 comments

Sort by:

Notmyrealname

Politicker

I read an explanation for this. Might even have been Sahil on LI. Basically all these late stage startups got super high valuations and massive funding rounds because of the boom and now they would need to grow their revenue very significantly just to get the same valuation they had last year.

Orgs going for series A/B at the moment wouldn't have the same massive price tag hanging over them and will likely offer better value for investors.

TennisandSales

Politicker

Head Of Sales

yeah this is my understanding as well. which makes sense. investors can spread out their investments more on seed/A rounds rather than focusing on a few larger orgs.

Kind of a way to be aggressive but also diversify.

but again, im not a VC so what the fuck do i know.

champchamp

Arsonist

Certified Savage

Thank you, it does make a lot of sense.

champchamp

Arsonist

Certified Savage

Thank you for sharing. Makes a lot more sense now.

Kosta_Konfucius

Politicker

Sales Rep

What made that boom go away? Was it just not sustainable

CuriousFox

WR Officer

🦊

We are also in a climate where anything and everything has/is happening. Weird times.

champchamp

Arsonist

Certified Savage

Haha, literally. It gets weirder every day.

butwhy

Politicker

Solutions Engineer

I think part of the Series D unicorn hit is that 1) they are the most overvalued in their funding rounds and 2) there is no IPO exit feasible right now. So the ones that have been threatening to IPO forever have to pivot and figure out how to bring in the funding runway to survive.

champchamp

Arsonist

Certified Savage

Great point about IPO it'd be insane at this point given the situation we are in.

LordOfWar

Tycoon

Blow it up

I spoke to a very well-off friend about him and his high-roller friends' liquidity lately, most are still tied in or recently went into the market to take advantage of low prices so not a lot of cash going around that circle.

That paired with rising rates means cheap cash is drying up and people who have it are being more discerning about where they put it.

champchamp

Arsonist

Certified Savage

Thank you for the insights, it makes sense.

LordOfWar

Tycoon

Blow it up

Happy to be of some help

Rallier

Politicker

SDR Manager and Consultant

If companies didn't raise money RIGHT before the economy tanked, it's going to be a difficult time for the foreseeable future. As to why series D vs series A I'm not quite sure. It's going to suck for a lot of companies. Buckle up.

champchamp

Arsonist

Certified Savage

I agree, people in the first comments made a great point about why series A make more sense now.

DragonTiger

Good Citizen

VP of Sales

Last year SAAS multiples on average was 15x. Now they are ~5X. So you need to sell shitloads of more deals in the next 12 months to get the same unicorn valuation. Almost 200M in revenue.. plus it is forecasted that there will be 70% less capital in the market in the beginning of next year. So burn needs to be low, you need to grow like hell, and only the best companies will get new rounds.

champchamp

Arsonist

Certified Savage

Damn, 15x to 5x is crazy, makes sense though. I saw a business acquisition guy talking about how he never recommended people to acquire SaaS companies because of the 15x-20x valuations.

But that at the beginning of COVID and now were the right times for people wanting to acquire tech businesses.

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Series A are still low investment dollars with high returns being possible. Series D+ are large dollar amounts that have lower returns and are probably still losing money if they need that round. It makes sense.

champchamp

Arsonist

Certified Savage

Thank you, it does. much clearer now.

NotCreativeEnough

Big Shot

Professional Day Ruiner

its because its a horrible climate for an IPO right now. Investing in a series D company required a massive investment. If a VC is investing at that stage its because they're banking on a big IPO in the near future. The way the market is right now, you would have to be complete loon to try and IPO

champchamp

Arsonist

Certified Savage

Thank you, that makes a lot of sense.

Bravado is a community of trusted sales professionals endorsed by their customers.

Products

The War Room Jobs Salary Guide Tech Sales U

Company

About Us How It Works Blog Bug Bounty

Contact

Press Careers

If you are hired as a contract sales rep by a Bravado customer, we may ask you to prove access to the employee email account provided to you by that customer. This data will be shared with customers to track your sales productivity; customers can use this data to confirm you meet the minimum activity requirements to pay out your ramp stipend and commission.

champchamp

Funding drying up

20 comments

Related posts

Do you care about new funding rounds?

What is typical base/commission % for a company pre Series A funding?

Hiring freeze until company hits Series A funding milestone.