Here’s How Far VCs have Lowered Revenue Expectations for Seed through Series B

Here’s How Far VCs have Lowered Revenue Expectations for Seed through Series B

Kruze Consulting data reveals how significantly the venture capital fundraising market for companies has changed in the last several quarters. Kruze, which provides private tech companies with accounting, tax, and venture capital-related services, has access to hard data on startup performance. 

Healy Jones, a former venture capitalist and vice president of financial planning and analysis at Kruze, used aggregated, anonymized data from startup funding rounds to detail how much revenue entrepreneurs are generating at various fundraising benchmarks across time.

We looked at how quickly revenue averages for businesses entering early-stage fundraising events had fallen in the last nine months compared to previous years. The result is straightforward: In recent quarters, software firms have raised fewer early-stage rounds (through Series B) with lower revenue totals than in previous years. Data from hundreds of early-stage software (SaaS) shows that startup growth is not speeding up — with one notable exception that we will explain.

I am not interested in paying for data, so before we get into what is going on and why, here’s the raw data from Jones and Kruze. The Exchange recalculated the percentage changes to ARR levels using shared data to allow for a few more decimal points:

Revenues are slimmer, and growth rates are changing. According to the statistics, income reported by SaaS businesses raising seed, Series A, and Series B rounds has seen a recent and significant fall. It also reveals that from 2019 to Q1 2021, seed and Series a software companies grew at a slower rate. Our clients have raised more than $5 billion in seed and venture capital, with nearly a billion in the last year alone. Our clients’ books are trusted by top tier VCs, and Kruze understands how to prepare a startup’s financials for VC due diligence. Our clients are certain that they will be prepared for the next round.

Every month, one to two of our clients added to our roster. Our team produced accounting and tax due diligence requests for some of the world’s most well-known public firms, every month, we assist entrepreneurs in completing the most crucial transaction of their lives. Our tax credit work saves our clients approximately $10 million in cash expenses each year. Our startup tax experts know how to help unprofitable businesses lower their burn by utilizing tax benefits. Hundreds of well-funded companies rely on Kruze to provide sound advice at a fair price.