global venture funding Crunchbase data shows a pretty bleak picture of late, with investment declining in the third quarter despite a late-game rebound from big AI deals.
And this story is no different for SaaS startups.
Net new SaaS sales in May were down from a surge in the first quarter, but churn rates worsened due to reduced intercompany budgets and higher borrowing costs. At the same time, extension rounds, a key indicator of the overall health of the sector, declined.
U.S. VC SaaS follow-on activity rose from a high of $9.7 billion in 270 deals in March to a low of $1.5 billion in 131 deals in October, according to PitchBook data compiled for TechCrunch. decreased to the value. The decline in the number of transactions has been consistent, with the total number of SaaS follow-on transactions decreasing by approximately 10 to 40 transactions each month since June.
Of note is that the total value of SaaS expansion contracts remained steady between $1.5 billion and $2.9 billion from April to October. But it just shows that a smaller group of startups are securing disproportionately large extension rounds.