In a deeply insightful G2 Reach panel, SaaStr CEO Jason Lemkin moderated an engaging discussion on the current B2B SaaS investing landscape and what we can expect in the years ahead.
The expert group of investor panelists – Accel Partner Arun Mathew, Inspired Capital Founder & Managing Partner Alexa von Tobel, and Salesforce Ventures Managing Partner Paul Drews – tackled a wide range of topics, from the volatility of the investment landscape to understanding the nuances of building a successful, durable business.
5 B2B SaaS investing trends
I personally gained a wealth of insights from the discussion, as other entrepreneurs and business leaders tuning in did as well. Here are the top five takeaways I gleaned from this session:
- Despite economic headwinds, there is optimism in the investing landscape. According to Arun and Paul, the venture investing environment has somewhat improved compared to 12 months ago. Arun underlined, "Better. It was pretty bleak last year," reinforcing Paul’s sentiment that the pace of innovation and clarity in the market have created an improved environment. Optimism remains, but Alexa encouraged caution, citing unresolved issues in several businesses.
- Low investment multiples pose a key challenge. Jason raised significant concern about the potential for a structurally broken investment methodology caused by persistently low multiples. According to him, getting stuck in a 6x world indefinitely might pose substantial hurdles to investing success.
- Macro corrections and technological disruptions spur new opportunities. Jason and Paul view past periods of macro corrections and technological disruptions as sources of tremendous investment opportunities, suggesting optimism about the current situation. They further advocated that these unique times offer an opportunity to create robust businesses and return to fundamentals.
- It will be crucial to strike the right valuation balance. Both Jason and Alexa stressed the importance of startups focusing on solving real problems rather than merely chasing high valuations. A noteworthy observation came from Jason, as he pointed out an alarming misalignment within boardrooms - resulting from investors entering at different stages and valuations, leading to differing expectations and potential conflict.
- Venture capital is more than just funding. Reiterating the key point, Jason underlined that startups need to think beyond raising a maximum amount of money at the most attractive pricing. Instead, companies should carefully gauge their need for venture funding and evaluate the right amount of capital to raise. The discourse also touched upon the rising success of larger public companies investing in AI-driven applications while the smaller enterprises may face tough challenges to compete. Turning toward the topic of IPOs, Jason highlighted the feats exhibited by companies like Canva and Atlassian in their successful scaling and growth journeys.
The panelists painted a cautiously optimistic forecasting of IPOs, suggesting potential challenges and muted IPO activity in 2024 but promising a stronger year in 2025. Entrepreneurs were advised to understand the nuanced stress factors at the LP (Limited Partner) level - particularly relevant in periods of economic uncertainty and political events like elections.
Emphasizing the changing dynamics within the venture capital industry, the group highlighted the significance of aligning investors' interests with the ultimate success of the company while focusing on customer problems. Alexa envisioned us at the precipice of a uniquely promising period, ripe for the birth of successful companies.
The panelists' diverse perspectives on venture investing, coupled with their extensive experience and expertise, affirmed the value of strategic focus on problem-solving and resilience for startups navigating the complex investment landscape in B2B SaaS.
You can catch the complete panel discussion on-demand if you didn’t see it live at G2 Reach 2023.
by Lindsey Phillips
by Julia Lynch