The bid-ask spread is very wide. The “bid-ask” is as wide as we’ve ever seen it. The bid is what venture funds are willing to pay for equity in a company and the ask is what founders are willing to sell their equity at. The difference between those two numbers is astronomical. Many VC I know (us included) are now looking to pay 5x to 7x current ARR for good SaaS whereas founders are looking for 10x+, which is more commensurate with 2020 to 2022 pricing.
Longer sales cycles. SaaS companies are seeing the sales cycle elongating, more scrutiny in the sales process, more senior personnel from the customer side in the sales process, and customers being tighter with their budgets.
Many SaaS companies wisely raised capital in 2021 and the first half of 2022. We’re advising our own portfolio companies to make those dollars last longer than they planned. It’s also a good time do cull your staff. If you do a layoff, no one will think any less of you because, well, everyone is doing a layoff. Finally, we’re still very active. If you’re raising, reach out (my email is below).
Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at email@example.com://blossomstreetventures.com/metrics/