The Lies that SaaS Entrepreneurs and VC Investors Tell Each Other

I was back in Phoenix last week and I attended two popular events for tech entrepreneurs to connect with potential investors, including the annual Venture Madness event.

These venture-pitch events are well-organized and useful, but this year there was more awareness of the “common lies” that entrepreneurs and investors tell each other at these events.

Entrepreneurs pitch about their pre-revenue startups and project hockey-stick revenue growth in just a few years.

Investors and supporters know this almost never happens, but entrepreneurs present it anyway because “that’s what you have to do” to raise money from investors.

Entrepreneurs are presumably pitching for investment, but experienced founders already have investors lined up. And most of the other founders aren’t sure they will take outside investment yet.

And investors act like they are actively funding startups. Most aren’t very active right now.

Even in normal times, most funds invest in just 1-5 startup bets a year.

This entrepreneur “I would like your money but I don’t need it” and investor “We are active investors and let’s talk” dance has been going on for years at these pitch events.

This year there are more founders that aren’t desperate to raise funding or would like to stay away from funding altogether.

And many angels and VC investors told me they are struggling with their current investments and have slowed down investing in companies.

There were a few hot startups that will meet active investors at this conference and the in-person meetings that happened around it.

That’s the way it has always been in the investing game. Just s few.

Everyone’s putting on a confident face, but few deals will actually happen.

There will continue to be less money invested in SaaS startups in the next 2-3 years overall. Most VCs will struggle with their wounded returns and won’t raise another fund anytime soon.

And more SaaS founders will create efficient and growing businesses that don’t rely on other people’s money to create a valuable business.

It was great to see so many old friends and meet many SaaS entrepreneurs and investors I didn’t know yet. I have been attending, leading, presenting, or helping at these kinds of events for 20+ years.

We’re just back to more normal times for early-stage investing when deluded startup pitches and “easy money” aren’t normal and expected anymore.


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