Gloomy days? How external Go-to-market expertise will help VCs and B2B SaaS companies

An opinion piece by Juergen Weichert

How was 2023?

2023 was not an easy year for our industry. Trevor Clawson wrote an insightful article about the topic in February 2024 for Forbes : “The downturn in the overall tech sector has been severe, but in business software it looked like in 2022 that this sector was proving to be more resilient as investment value actually went up. However, the sector caught up with the broader market in 2023 with a material 59% drop.”

But why was it so bad??

Travor speculates: “So, business software lagged behind the broader market in terms of the downturn perhaps because purchase cycles and contracts tend to be longer.”

Based on my own experience as an operator, this is an important part of the truth. Buyers already started consolidating the number of software tools in 2022. In 2023 buyers added further budget freezes and additional approval loops.

What should B2B SaaS companies do?

In my opinion, B2B software companies have to double down on proving a measurable, tangible value proposition to their ICP-prospects. This value proposition has to materialize within 6 months after the purchase, the sooner, the better. Time-to value is paramount to justify usage of budgets. In order to achieve these goals, I recommend giving Go-to-market a broader approach than just sales and marketing. The GTM core of a company involves the C-Suite, Marketing, Sales, Partner, Customer Success and Product. The obvious results will be integrated processes and organizational changes. The more strategic result will be a holistic GTM mindset and a new data culture as the CRM data can provide valuable insights for all GTM players.

Is this a sign for crisis??

2023 was a year of many crises: War in Europe, inflation, tensions between China and Taiwan, war in the Middle East. Nonetheless, I strongly believe that it is rather a sign for a maturing market. Purchase behavior is professionalizing. The crises accelerated this process and opened “pandora’s box”. Hence, I doubt that this buying behavior will ever go back to the days of 2020/2021, when companies bought quicker and, let’s face it, often with less scrutiny.?

What will this mean for VC investments??

With longer sales cycles and declining close rates the go-to-market strategy, organization and execution of the target companies, especially Series A, will require more in-depth review. This additional scrutiny will mean opportunities for the target companies. Gaps in the GTM that create yellow flags or even red flags are identified faster and can be fixed earlier in the companies’ journeys.?

This will lead to efficient and effective GTM engines and will result in capital efficient growth. Capital efficient growth makes B2B SaaS companies more resilient in a world, where geopolitical developments can hardly be predicted.

So the investment climate will improve because VCs increase scrutiny on GTM effectiveness and efficiency??

Well, there is one problem, mostly a European issue. A majority of VCs in Europe are not run by former operators. These VCs have smart, analytical team members, very often with management consulting and investment banking backgrounds. Analyzing the GTM of a B2B SaaS company takes real-world experience. The VC companies that are run by former operators on the other hand have a bandwith challenge.??

Most of the time, the issues are not the basic pillars of the GTM motion as those are pretty generic. The devil lies in the details of how ICPs have been created, by which KPIs acquisition channels have been chosen and by which ones targets are set, how the CRM is set up or how the organizational interfaces between Marketing, SDRs, AEs, Customer Success, Parnter and Product teams have been created and are managed. Another factor that takes experience to validate is the company’s incentive scheme that too often does not allow for capital efficient scaling and/or does not support aligning the goals of the different teams. The list doesn’t stop here, but let’s cover that at a different time.

How can VCs increase scrutiny on GTM?

I am convinced that VCs will address this problem by engaging external GTM experts. These experts will be former GTM operators (CRO, CSO, CMO etc.) in B2B SaaS companies with profound experience in building GTM teams, raising financial rounds and having made plenty of the typical GTM mistakes in the course of their careers. The GTM advisors will be able to identify the strengths of the target companies’ GTM motion as well as potential yellow or red flags. There have to be pools of these experts because B2B SaaS is a very broad field covering a broad range of verticals, geos and client segments.

How will the engagement of external GTM advisors work??

A GTM expert should start being involved with a light assessment of market and GTM in the pre due diligence phase. If it comes to a due diligence, the advisor will analyze relevant data, e.g. CRM data, market models, organizational structure and conduct structured interviews with the GTM key players including executive management.

The outcome will be an actionable GTM due diligence report in the form of an expert opinion.

B2B SaaS companies that are planning for Series B might also consider pulling such experts in after they secured their Series A.

What happens post due diligence??

The target company will have a lot on the plate after the investment round. While the company is in execution mode and has to build for capital efficient growth, it also has to fix the gaps identified in the DD report. The GTM advisor will support the company by moderating internally and supporting the adjustments of processes and the organization. This support can go from consulting to fractional CRO activity until the C-Suite has been completed.?

Isn’t that overkill??

Indeed, I must admit that adding GTM advisory to an investment process requires investment of time and money. My point is though, that already today, external legal, financial and technical experts are integrated in professional investment processes. GTM is one of the key value drivers starting from Series A. I would argue it is negligent not to use GTM experts for assessing and improving one of the key value drivers. If done right, the GTM advisory comes with sustainable value for all stakeholders.?

Who benefits?

The VCs have more valid data points for their investment decisions and can prove to their LPs that they invest diligently in all aspects. They can allocate “dry powder” with a good conscience and higher probability of success.

The B2B SaaS target company has external expertise for GTM that saves them time and money as potential GTM traps are identified early. Processes and the organization are built for capital efficient scaling early on saving expensive (and unpleasant) restructuring later. Future rounds will be easier, because clear KPIs and processes are in place.

So, will investment processes really change and include GTM advisory & support?

I am doing my part to make this vision turn into reality as I (full disclosure) provide GTM advisory services. Stay tuned for how this journey continues and some insights into B2B SaaS GTM that I plan on sharing in the near future.