TLDR:
- Only the top 10-15% of venture-backed startups can likely raise another VC round at the moment.
- Raising a VC round requires specific growth metrics, which many startups may not currently meet.
So we took a look at some of the data from Emergence Capital’s survey of 600+ venture-backed software startups and discovered that only the top 10% or so of venture-backed start-ups can likely raise another VC round. The reason for this is simple math. To raise a VC round, startups need to exhibit rapid growth. This includes growing very quickly on the way to $1m ARR, ideally at a rate of 20% or more each month. The top decile of venture-backed startups is struggling to meet these growth metrics at present.
In the author’s own portfolio at SaaStr Fund, about 20-25% of startups are growing rapidly and can raise VC funding. However, the majority may not be able to secure outside funding right now. This doesn’t mean they won’t be fundable later, as almost every startup goes through rough times. It’s essential for startups to be self-aware of their current situation and to seek advice from existing investors.
Perhaps 90% of VC-backed start-ups are not venture-fundable currently. It is advisable for startups to consult their existing investors to determine their fundability in 2024. Overall, the ability to raise another VC round largely depends on meeting specific growth metrics, which many startups may struggle with at present.
