I moderated a panel at the SaaStockUSA conference in Austin yesterday with two VC investors and a revenue-based financing (RBF) lender to share what has changed for each of them in the last 18 months.

The world of tech finance has changed significantly in the last 18 months since the boom times and cheap money that peaked in 2020 and 2021.

Almost every tech company and investor that raised a big chunk of money when it was “cheap and easy” is struggling to hit the crazy growth goals they promised.

Interest rates were effectively zero for 10 years, but now they are almost 5%. This constrains software buyers who are managing budgets tighter and buying less. It also means less money is pumped into investment and lending firms for tech.

This investor panel included three very active SaaS investors:

• Miguel Fernandez Larrea, CEO of Capchase, a large revenue-based financing lender for SaaS companies in the US and Europe.
• Cathy Gao, partner at Sapphire Ventures, a “growth VC” in Silicon Valley and Austin that invests in growing software companies that are generally above $10M ARR
• Tae Hea Nahm, cofounder of Storm Ventures, an early-stage seed and Series A investor based in Silicon Valley. Tae Hea has been investing in software companies for over 20 years.

We didn’t focus on the investments these funders made in the crazy boom time that aren’t doing well. They all know there is a lot of pain out there in funded software companies with missed sales targets, layoffs, and running out of cash.

We did focus on what’s going on now in SaaS funding. It sounded a lot like 5 or 10 years ago when fewer VC investors did fewer deals at more practical valuation multiples. Investors now take much more time to build relationships with founders and do deep due diligence before investing.

The standards for investing in equity or debt have gone up drastically in the last few years.

But each of the panelists is seeing more companies lining up for funding than two years ago. The demand is still high for funding, but there is much less equity funding and debt available.

• If you raise revenue-based (debt-like) funding, you have to be VERY SURE you can pay it back soon.
• If you raise a big Series B round, you have to be VERY SURE you’re on the road to a big exit with an IPO or an acquisition in 5-7 years.
• If you raise seed or Series A funding from a VC investor, you have to be VERY SURE you can keep growing at 100%+ for the next few years, even though it’s still early and you don’t have all the answers yet.

If you aren’t VERY CONFIDENT about playing that game and hitting the goals you agree on with your investors, you shouldn’t ask for their money. It won’t end well for you or your investors.

If you didn’t raise big outside funding for your growing SaaS business, you’re doing fine and probably picking up speed. I talked to 15 practical SaaS founders and bootstrappers at the conference who are hiring and growing, not panicking and cutting staff.