Most of the 10,000 software companies that raised big VC funding at high valuations in the 2020-2022 boom are stuck or stalled. Which means the founders won’t win–and neither will the VCs.
Many of those crazy startups are now out of business, which is the venture startup gamble.
A small percentage have grown successfully and have already been acquired, mostly for modest exits.
Almost none of them have gone public. There have been very few exits since 2022.
So if you raised $20M on $3M in revenue, VCs expected a 10X return on their investment, implying an exit at $1B+ expectation. Won’t happen.
Since 90% of the surviving software companies didn’t grow rapidly and exit, they are now stuck.
They can’t raise more VC funding. VCs have moved on to AI-first companies.
And they can’t sell for a compelling valuation when they aren’t growing fast and are still burning cash.
VCs have moved on, and now they can’t sell their companies for a win.
There are likely 5000+ VC-backed SaaS companies that raised large rounds with high hopes during the COVID-19 boom.
Now the reality is hitting.
Most founding teams won’t win any prize. They are stuck in zombie companies they can’t grow.
Most VC funds won’t make positive returns for their investors. Their funds and firms are screwed too.
What will happen? Fire sales of these companies to get out and move on. Especially if they took on big debt too.
Some will make it and grow faster with AI, but most won’t.
It’s a mess out there.
There is a lot of money quietly buying the leftover software companies for a deep discount out of these dormant VC portfolios right now.
The world changed during the COVID boom, and now it’s changing with a new wave of AI-first rocket-ship startups.
If you’re competing with a VC-funded company from this vintage that took $50M+ in big funding rounds, you probably have an advantage.
VCs have moved on, but the founders can’t.
