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funding vs growth

over 1 year ago 3 mins read
Adam Schoenfeld
Adam Schoenfeld

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Welcome back to my almost-weekly newsletter where Camille and I share B2B SaaS data and examples.*


In this report, we used **Keyplay's 🆕 Growth Signals** to analyze funding, hiring, and headcount growth data for 17.5K VC-backed companies and compare B2B SaaS and PLG.

🔑 ▶️ If you want to build account lists like Florin or enrich your CRM with these signals, shoot me a reply here.


In 2021, venture capital was doubling down on a growth at all costs mindset.

In early 2023, we see two dominant narratives: less VC funding and more tech layoffs.

But we know that big tech cuts, multiple compression, and correction is only half the story.


* Despite big tech layoffs, more SaaS companies are increasing than decreasing headcount

* … Not just in B2C, B2B too

* Overall growth is still positive for B2B SaaS

* Essential & innovative tech is securing funding despite slowdown

⛔ Funding ≠ Growth

Funding’s drying up. Should startups sweat?

Despite six percent staff cuts now feeling commonplace in tech, our PeerSignal data shows more VC-backed companies are increasing headcount than decreasing it at all stages, about 60/40 overall.

Funding recency plays a huge role in recruiting, but even companies with relatively fresh funding are not necessarily subscribing to a “grow like crazy” mindset.

Even companies with funding rounds in the past six months are making cuts.

Startups last funded one to two years ago saw the most headcount decreases in the past three months.

This matches up with the recent market shift – companies funded in ‘21 and early ‘22 were most likely to subscribe to the growth at all costs model with rapid headcount ramp.

As the climate changed, so did run rate.

Many were forced to course correct by cutting budget and staff.

Funding takeaways:

* The cuts are real.

Can’t assume high funding = high growth in 2023.

* It’s not as bad as it looks.

There is still more growing than cutting, even in the lower funding bands.

* The majority of companies we track last raised during the tech spending peak one to two years ago.

Many are now adjusting.

📈 B2B SaaS was hit harder than other VC-backed companies

... but median growth is still positive

We looked at headcount change in 4 buckets:


Big cuts (-10 or lower)


High growth (10%+ or high)


Any cut (<0%)

4 Any increase (>0%)

For this we took out smaller companies with <10M in funding where small changes distort percentages.

B2B SaaS leans a bit more negative, but follows a similar shape.

Within B2B SaaS, 55% increased headcount in the last three months compared to 45% decreasing headcount in the same window (compared to the 60/40 ratio in overall VC-backed).

Even on the extreme ends – 10% headcount changes in either direction – more companies saw 10% increases than decreases in the past three months.

Positive growth signals for B2B SaaS

Median growth for B2B teams over the past 3 months is *positive.*

Still more companies increasing headcount over the last three months – the worst layoff stretch for B2B SaaS in years – than decreasing.

The 1K community submissions to our supports this narrative – demand for B2B tech talent is still strong in places.

18 months ago we could assume that every VC-back SaaS companies was investing, growing, and hiring.

The growth stories are still there, but they aren’t everywhere.

Software spending is expected to grow 9.3% from last year.

According to Gartner, that means 2023 SaaS spending is expected to *increase* from last year but decrease from 2021.

Considering 2021 was a SaaS spending anomaly in many ways, Gartner’s data suggests B2B software spend will bounce back after just a down few quarters.

(Smart) deals are still happening

We found 867 B2B SaaS companies in our index, ~13% of the total VC-backed B2B SaaS companies, that raised funding in the past six months, during the large tech layoff waves.

Here are some that stood out to us:

Drata: Raised a jaw-dropping $200M Series C in December, just a month after Twitter, Meta, and Amazon announced mass layoffs.

Why? Because security and compliance matter in any climate.

Drata competitor Vanta also raised several rounds earlier that year.

Coupa: In December, the spend management company announced its agreement to be acquired by Thoma Bravo for $8B.

A huge deal considering the climate.

Unsurprisingly, procurement software Tropic and Vendr also raised rounds in 2022.

Why? Every VC-backed company is looking to cut spend and preserve run rate.

Procurement and spend management software help manage that.

Keyplay: No bias, of course.

:) Our SaaS company (which powers our PeerSignal research) announced a $3M seed round in December to help GTM teams adjust to the new return to rigor era with better account signals and automatically refreshed lists.

Why? To help B2B companies improve account targeting and outbound efficiency with better account data and insights.

Jasper: Another AI darling, AI content platform Jasper raised $125M at a $1.5B valuation last Oct, impressive given the recent correction in valuations.

The sheer amount felt reminiscent of 2021 deals.

Why? All investor eyes are on AI right now.

Microsoft recently invested a rumored $10B in OpenAI.

OpenAI's fund also invests in other promising AI startups, like Descript.

Both Jasper and OpenAI have a comfortable head start in the AI race.

Next week, we'll dive deeper into PLG growth and other intriguing funding, acquisition, and hiring trends in emerging B2B markets.

Have more questions or feedback?

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Adam & Camille