2024 Theory Ventures Go-to-Market Survey: Optimism Rises Amid Changing Market Dynamics

Last week at SaaStr, we unveiled the results of the Theory Ventures 2024 Go-to-Market Survey. This annual survey shines some light into the state of SaaS sales & marketing, offering a glimpse into how founders & companies are navigating the current business landscape.

Here’s a breakdown of the key findings:

1. Increased Optimism & Steady Fundraising Expectations

Despite the challenging economic environment, founders are more optimistic than 2022. The average outlook score has risen from 6.1 in 2022 to 6.7 in 2024.

Interestingly, fundraising prices expectations have remained relatively stable, despite significant increases in the cost of capital. With the Federal Reserve raising rates by 550 basis points since 202, one might have expected a decline in valuations. But that’s not the case. The average Series A round size has increased about 40% in the last 4 years.

2. Lengthening Sales Cycles & Increasing Payback Periods

On average, sales cycles have increased by approximately 13%. This elongation has had a direct impact on payback periods, which have also seen a commensurate increase.

The extended sales cycles present a challenge for startups, potentially affecting cash flow & growth projections by creating pipeline shocks.

3. Quota Increases & Improved Conversion Rates to Reign in Economics

Despite the longer sales cycles & in effort to drive more efficiency, startups are setting more ambitious targets. Quotas have increased by an average of 14% year-over-year. This increase outpaces the annual inflation rate of 3.4% by more than four times.

Balancing out the extended sales cycles & increased quotas, we’re seeing improved performance in lead conversion. The typical company experienced a 9% increase in sales qualified lead conversion rates. Deals may be taking longer to close, so sales teams are becoming more effective at converting prospects into customers, refining their ICP (ideal customer profile) & targeting.

4. The AI Factor: Perception vs. Reality

Approximately 73% of the survey respondents reported deploying AI in their sales & marketing functions. However, the impact of AI adoption presents an interesting paradox:

• No Significant Impact on Conversion Rates: The survey found no statistically significant increase in conversion rates tied to the use of AI.
• Perceived vs. Actual Productivity Gains: While there’s no meaningful increase in measured productivity yet, the perceived increase in productivity ranges from about 25% to 75%.

This discrepancy between perceived & actual impact suggests that we’re still in the early stages of AI adoption & measurement. It’s possible that companies are experiencing qualitative improvements that haven’t yet translated into quantifiable metrics, or that the full potential of AI in sales & marketing is still being realized.

Overall, the survey results indicate a resilient & adaptive SaaS ecosystem. Founders & companies are navigating challenges with optimism, leveraging new technologies, & finding ways to maintain growth in a dynamic market environment.