Support for MM comes from Tropic, a cost-savings platform that automatically finds ways for businesses to reduce and control costs. By combining procurement workflows, supplier management, and benchmark data together in one place, Tropic makes savings opportunities easy to find and act on.
What did it take to raise a round in 2023?
The concept of the “SaaS Napkin” has been around for, well, probably as long as SaaS.
The gist is to summarize the themes that defined tech funding rounds during a given calendar year, all on one page.
Some themes stay the same - like demonstrating a solid financial profile when you are on the pre-IPO track - while other details change from year to year - like the average valuation for of a Series A.
TL;DR:
The AI Premium is Real
Net Dollar Retention is down across the board
Burn multiple adjustments were needed
Really good growth is now considered great
Series A is the new Series B
Author’s note: This is all meant to be directional. Do not get your panties in a bunch because you managed to raise a Series A at a bajillion dollars. Good for you. I don’t care. We are painting in broad brush strokes here and talking thematically.
This theme rings incredibly true at the Seed level. While valuations for “typical” B2B SaaS founders came down to earth ($5M to MAYBE $15M or $20M), if you were an early firm building with AI AND had a second time founder at the helm, you could easily double that valuation in 2023. The same goes for the amount of cash you could raise - instead of $1M to $5M checks, you could make $10M look easy.
Speaking of that, remember when pop punk powerhouse All Time Low raised $113M at a $260M valuation?
France’s Mistral AI raised $113M at a $260M valuation.
Net Dollar Retention is down across the board
With headcount growth going in the wrong direction, license expansion evaporated.
As I said in a previous issue:
Since tech companies are also the biggest buyers of tech, Net Dollar Retention Rates are getting worse as headcounts decrease
NDR was down substantially across the board, and way below prior targets. In the public markets you are seeing a decrease of 10% to 15% compared to the historical median. 115% is the new 130%.
It’s safe to say we saw the same trend in private markets. Why?
Less HC = Less Seats = Less Expansion Opportunities = Lower NDR
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