A short transcript of Jason M. Lemkin discussing current VC expectations for SaaS/B2B startups: VCs now seek a trifecta of high growth, capital efficiency, and strong margins, with a practical target of reaching $100–200M ARR within ~7–10 years to position for IPO. Lemkin argues capital efficiency matters more now as available funding has normalized toward prior levels.
I don't think anyone brags about being a unicorn today, do they? Do founders brag about it? It's gone out the window as a term of bragging. Brag ification.
I'm just looking at a lot of founders who are DMing me and they're going, I don't get what you want to see. Do you want to see growth still? Do you want to see profitability now? Do you want to see margin improvement? What do you want to see at the early stage so I can focus my efforts? When you hear that, where do you go at?
Let me step back for a minute. I think the key to success in SaaS and B2B investing, that I only do and you do a lot of it actually hasn't changed that much. It's that Somehow, somehow in seven to 10 years you've got to get to 100 plus million in revenue. Okay. You just have to. And really today it probably has to be closer to 200 million because that's when you can really IPO, right, approaching 200 million. So you've got a decade to get to 200 million. Like there's, there are certain rates that you just have to grow and whether and nurage from battery simplified it all for triple, triple, double, double. Right. For me in the old days it's like, you know, can you go from like 1 to 5 and 5 quarters or less that will also set you up. That was, I guess that was a 5x. But the math has to work in founders and the only thing that's changed is the amount of capital you're allowed to spend. Right. In the old days the rough rule is we could raise, including ABCDEFG, H, I and J around, you could raise 100 total, right? Then that kind of grew to like 3 or 400 million as the IPOs got bigger at the peak. And now we're probably back to 100 million which is everyone has to be capital efficient in a way we forgot how to be. And so VCs unfortunately are looking for the trifecta. They're looking for top tier growth, but also some sort of top quartile capital efficiency. And even at, you know, even at a million, even at a million of revenue, maybe not know, 10k in MRR, but even at a million an error. They're looking for this combination. And all the original investments I did, not everyone not Benchmark Square, they all met that bar, right? They were all growing at top decile rates. But we're pretty capital efficient. And that's, that's the market today, I think, and they're harder to find, especially with founders, burn rates and everything where we have not fully reset. If we are going to reset to sort of the old day expectations, at least in SaaS.
