It’s a Lot Harder to Build a SaaS Decacorn Than It Used To Be - The Entrepreneurial Way with A.I.


Wednesday, April 27, 2022

It’s a Lot Harder to Build a SaaS Decacorn Than It Used To Be


So the story of the past few years has been the explosion of SaaS and Cloud unicorns.  With upwards of 400 SaaS and Cloud startups now valued at $1B+ now (out of 1,200+ total Unicorns), times are good.

But … but … it’s not that simple.  VCs and investors in unicorns need to make money.  They need them to become … decacorns.  Especially the later stage investors do.

So what are late-stage investors expecting?

  • Well early-stage (seed, Series A) investors are hoping at least 1 investment per fund does 100x or more.  Late stage investors by contrast are hoping that at least a few do 10x.
  • Late-stage investors are hoping for a few decacorns per fund ($10B or higher outcome), and a bunch that do 2x-3x (maybe a $3B-$4B outcome on a $1B valuation), some at 1x-2x, and a few that do worse.

This is harder to see happening these days.

With the fall in valuations, it’s just a lot harder to be a decacorn:

Take a look.  To raise money at $1B, that means at least today, at least for now, you’re staying you’re better than Monday, better than Coupa, better than Procore, and goodness, better than Gitlab, RingCentral, SentinelOne, and Confluent.  And so many of those are just growing at jaw-dropping rates.

It is what it is right now.  SaaS remains on fire from a customer perspective, but not so much from a public markets perspective.   UiPath was on fire at IPO, and now today is “just” a decacorn.  Still epic.  But not really enough to have supported some of the crazy valuations we’ve seen in the past few years.

Just bear in mind how things have changed.  It sounds fun to make Unicorn status.  But the implicit bar from that milestone is just so high today.  So high.


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Jason Lemkin, Khareem Sudlow