Blog Post

Aug 15, 2023

A Hint Of SaaS - August 2023

Contrary to what people expect, "vacation season" (aka July and August) have been big months for many of our founders. The come-down from the Pandemic fever dream over the last 18 months has been real, and we salute those who continue to press onward via growth, revised (and improved!) business models, and -- in some cases -- new fundraising! 

We've spent time talking about the importance of using pricing as a lever for contract expansion. The very notion of expansion, however, has fallen on hard times in 2023. 

The most recent version of Scale VP's "Scale Studio" quarterly reports show a clear picture of slowing growth among VC-backed startups. Even among top performers, year-over-year growth continues to slow. In the course of twelve months, ~65% growth has gone from being the median to being top decile.

Digging a bit deeper, this high-level trend appears in almost all key SaaS sales metrics.

  • Growth rates for new ARR have fallen even more for VC-backed companies than they have for public ones. 

  • Expansions, as a percentage of new ARR, have fallen by ~75% since 2Q21 and 50% since 2Q22. 

  • Churn rates have gone up dramatically since the end of 2022.