The 2022 SaaS Funding Napkin

Christoph Janz (PointNine) recently published the 2022 version of his popular SaaS Funding Napkin.

As the name implies, the SaaS Funding Napkin aggregates primary SaaS milestones required to raise venture capital and summarizes them as if on the back of a napkin.

The SaaS Funding Napkin is useful reference material for any SaaS founder.

SaaS Funding Napkin

For SaaS founders looking to raise capital in 2022, here are two key takeaways from the SaaS Funding Napkin.

 

SaaS Funding Napkin Key Takeaway #1

Nearly half (46%) of the investors they surveyed said that Product-Market Fit has become more important in 2022.

By comparison, only 26% of the investors said that Revenue Growth Rate was more important in 2022.

This is consistent with our 5 measurable outcomes that signal product-market fit:

  1. You have a narrowly defined customer type and use case;
  2. You have acquired 3-5 satisfied customers who fit that type and use case following a similar customer acquisition process;
  3. Those customers will kick and scream if you take your product away;
  4. You know the specific and objective reasons why they would be upset if they lost access to your product; and
  5. Your LTV:CAC is better than 1:1.

Key Takeaway: For SaaS founders looking to raise capital in 2022, systematic sales activities yielding repeatable revenue results matter more to early-stage investors than just revenue growth.

 

SaaS Funding Napkin Key Takeaway #2

The largest number of investors – 82% – ranked Capital Efficiency as more important in 2022.

By comparison, only 43% said that Quality of the Team was more important in 2022.

This is not surprising given the ongoing downturn in the global start-up economy.

These macro conditions also help explain why Valuation was ranked by the second-highest number of investors (75%) as more important in 2022.

During the bull market of the past 10 years, the wide availability of venture capital and relative price insensitivity of investors combined to mask go-to-market inefficiencies.

Key Takeaway: For SaaS founders looking to raise capital in 2022, random sales activities – even when they yield revenue – will not attract venture investors.

The current SaaS Funding Napkin reinforces the reality for founders looking to raise capital that systematic go-to-market activities that use limited customer development resources most efficiently and yield repeatable revenue results is the best path to investment-readiness in 2022 (and for years to come).

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