On the insightful G2 Reach panel, SaaStr CEO Jason Lemkin led a fascinating discussion about the current B2B SaaS investment landscape and what we can expect in the coming years.
A panel of investor panelists — Accel partner Arun Mathew, Inspired Capital founder and managing partner Alexa von Tobel, and Salesforce Ventures managing partner Paul Drews — discussed a wide range of topics, ranging from the volatility of the investment environment To understand the nuances of building a successful, long-lasting business.
5 B2B SaaS Investment Trends
I personally gained a wealth of insights from the discussions, which also involved other entrepreneurs and business leaders. Here are the five most important takeaways I gleaned from the session:
- Despite economic headwinds, the investment outlook remains positive. Arun and Paul said the venture capital environment has improved compared to 12 months ago. “It’s much better. Last year was pretty bleak,” Allen stressed, reinforcing Paul’s view that the pace of innovation and clarity in the market creates an improving environment. Optimism remains, but Alexa encourages caution and notes that several businesses have unresolved issues.
- Low investment multiples pose a key challenge. Jason expressed serious concerns about the possibility that persistently low multiples could lead to structural damage to the investment approach. He said being stuck indefinitely in a 6x world could create significant obstacles to investment success.
- Macroeconomic adjustments and technological disruption stimulate new opportunities. Jason and Paul view past macro corrections and technological disruptions as sources of great investment opportunities, which suggests they are optimistic about the current situation. They further argue that these unique times provide opportunities to create strong businesses and return to fundamentals.
- Achieving the right valuation balance is critical. Both Jason and Alexa emphasized the importance of startups focusing on solving real problems rather than just chasing high valuations. Jason made a noteworthy observation, noting that there was alarming inconsistency within the boardroom – this was due to investors coming in at different stages and valuations, leading to different expectations and potential conflicts.
- Venture capital is more than just money. Jason reiterated key points, emphasizing that startups need to think about more than just raising the maximum amount of capital at the most attractive price. Instead, companies should carefully weigh their need for venture capital and evaluate the appropriate amount of financing. The speech also touched on the growing success of large public companies investing in AI-driven applications, while smaller businesses may face serious competitive challenges. Turning to the topic of IPOs, Jason highlighted the feats companies such as Canva and Atlassian have demonstrated in their successful scaling and growth journeys.
Panelists offered cautiously optimistic forecasts for IPOs, noting potential challenges and subdued IPO activity in 2024 but promising a stronger 2025. Entrepreneurs are advised to understand the subtle stressors at the LP (limited partner) level – especially during economic uncertainty and political events such as elections.
The panel highlighted the changing dynamics of the venture capital industry, emphasizing the importance of aligning investors’ interests with a company’s ultimate success while focusing on client issues. Alexa envisions that we are on the edge of a uniquely hopeful period, ripe for the birth of successful companies.
The panelists’ diverse perspectives on venture capital, coupled with their extensive experience and expertise, affirmed the value of new startups’ strategic problem-solving and resilience capabilities in the complex B2B SaaS investment environment.
If you did not watch the full panel live at G2 Reach 2023, you can watch the full panel on-demand.
