SaaS investment returning to normal

Last week, Pitchbook put out a really interesting chart which we’ve reprinted below. It shows that “US VC firms raised $11.7 billion across 99 funds in Q1, according to a first look at the latest PitchBook-NVCA Venture Monitor. If that fundraising pace were to continue through the rest of the year, it would mean the lowest total capital raised since 2017 and a 73% drop relative to 2022.”

At first blush that sounds really scary. But looking at the data historically, what it really shows is we could be returning to the normalcy of 2014 to 2018, when valuations were reasonable and markets were normal. We’d emphasize that there was nothing normal about the period from 2019 to 2021. Those were really frothy years for venture capital whereby brand name VC (looking at you Tiger and Softbank) forgot about fundamentals and building real businesses. It was an unhealthy period and to it, we say good riddance. We’re looking forward to a return to normal and so should you, as long term it’s a much healthier place for venture investing sustainability and viability.

Big thanks to Pitchbook for putting together the data and sharing it.

Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at sammy@blossomstreetventures.com. We invest in companies with run rate revenue of $3mm to $30mm, with year over year growth of 20% to 100%+ depending on revenue. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $4mm. Also visit https://blossomstreetventures.com/metrics/ for always up-to-date SaaS metrics.