SaaS investment will return to normal

Recently 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 (Tiger and Softbank for instance) 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 the venture investing sustainability and viability.

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

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