Sep 15, 2022 · 51m · saastr
VC State of the Market with SaaStr CEO Jason Lemkin and Cowboy Ventures Founder & MP Aileen Lee
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
SaaStr CEO Jason Lemkin and Cowboy Ventures founder Aileen Lee explore the structural evolution of seed venture capital, macroeconomic valuation resets, boardroom governance, and the ongoing push for diversity across the tech ecosystem.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Jason holds 39% of the talking time here. How this is scored →
Jason as informed peer 5.5 Guest teaching 3.9 Guest disagreement 1.4 Jason pushing back 1.9
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:07 Aileen rejects post-Figma optimism
Aileen rejects Jason's suggestion that Figma's mega-deal will revive bullish growth multiples, highlighting that even top SaaS leaders are stuck trading at 10x to 15x.
Hardest push from Jason ▶ 30:55 Jason challenges VCs' sudden DCF expertiseJason pushes back against venture capitalists adopting sophisticated macro and discounted cash flow rationales after spending years ignoring interest rate realities.
Biggest teaching moment ▶ 32:11 Aileen's masterclass on DCF and revenue multiplesDrawing on her Morgan Stanley M&A background, Aileen clearly explains how zero rates distorted discount calculations and caused revenue to substitute for EBIT.
Jason holds their own ▶ 44:30 Jason articulates the SaaS 10x ARR baselineJason authoritatively outlines his historical SaaS valuation framework, showing how founder pedigree and growth quality adjust valuations upward or downward from a 10x ARR anchor.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Founding Cowboy Ventures and the Rise of Seed Funds | 4 | 2 | 1 | 1 | Jason sets the stage and introduces Aileen as a seed fund pioneer. Aileen graciously expands on early seed history by citing peers like First Round, Baseline, and Harrison Metal. | |
| The Unicorn Study and Transforming Diversity in Tech | 5 | 1 | 0 | 0 | The conversation is highly collaborative and reflective as Jason recalls Sand Hill Road culture in 2013. Aileen praises Jason for SaaStr's proactive diversity policies and ban on all-male panels. | |
| Figma's Mega Acquisition and the Realities of Overnight Success | 5 | 3 | 1 | 2 | Jason and Aileen analyze Figma's $20B acquisition and discuss how early-stage success often requires years of quiet pre-product gestation before exponential growth occurs. | |
| Valuation Multiples Reset Across Venture Capital Rounds | 6 | 4 | 2 | 2 | Aileen details the valuation reset occurring across Series A and B rounds. Jason probes on Seed round dynamics and how newer investors lacking cycle experience are misjudging market adjustments. | |
| Boardroom Transparency and the Denominator Effect on LPs | 6 | 5 | 2 | 2 | Aileen provides an insider breakdown of why board members sugarcoat bad news to protect LP references and explains how the denominator effect constrains LP venture allocations. | |
| Understanding Macroeconomics, Discounted Cash Flows, and SaaS Multiples | 6 | 7 | 2 | 3 | Aileen explains discounted cash flows and why revenue multiples acted as an EBIT proxy in a zero-interest-rate environment. Jason challenges whether VCs genuinely understand DCF or were merely speculating. | |
| Audience Q&A: Balancing Rapid Growth Against Path to Profitability | 6 | 4 | 1 | 2 | Addressing audience questions on margins and growth, Aileen explains stage-appropriate profitability milestones. Jason underscores that low growth with profitability remains unviable for venture backing. | |
| Audience Q&A: Founder Pedigree, Second Chances, and Marketplaces | 6 | 5 | 2 | 3 | Jason lays out his 10x ARR baseline rule of thumb, while Aileen advises on pricing power, dilution bounds, and marketplace balance dynamics, concluding with her near-miss investing in Square. |
Statements from this episode (18)
Lee: Mid-2000s angel investors co-invested at $3M to $4M pre-money valuations
“The seed thing was happening in like the mid 2000, like, oh five, oh six, that's when we really should have started, by the way. And angel investors were getting in at three pre, four pre, and they were all co-investing”
Lee: Kleiner Perkins held zero LP meetings across 12 years
“We never had an LP meeting in the 12 years that I was there”
Lee: VCs are privately stressed over portfolio companies with unsustainable valuations
“A lot of people are sitting on super overvalued investments. And depending on what price they paid and what's in their portfolio, they are super stressed out right now because they don't see a path for their portfolio companies or a chunk of their portfolio co…”
Lee: Self-serve PLG startups can afford longer pre-revenue development than sales-led
“If you don't, if you can have self-serve and you don't have to spend any money on AEs or customer acquisition, then you can spend a lot of time building the product and then it'll fly off the shelves. If you have a product that has to be sold, it's a lot harde…”
Lee: Over 60% of Cowboy Ventures investments back pre-product founders
“Most of the time, like more than, probably 60% of the investments we've made in the past 10 years are founders who need money to build the product.”
Lee: Series A valuations will reset to $20M-$40M pre-money
“Well, Series A's we're going to be back to eight to twelve million dollars, and Series A valuations will be back to 20 to 35, 40 pre. And B's will be back to a hundred pre, instead of four or 500 pre.”
Lee: Seed founders pitch $6M rounds but quickly reduce asks to $3M
“Right now we're seeing a lot of seed extensions. We're seeing a lot of seed founders who are sending us decks that have a six million dollar seed raise in them. And I'll email the founder and be like, Hey, this looks really interesting. Are you still thinking …”
Lee: Mega-funds give junior VCs $2M-$4M checkbooks as training wheels
“There's a lot of, like, basically, as these funds got bigger, they had more fee income. And so they could feed more mouths. And they would hire younger people and say, you have a checkbook. Like, you don't have a big checkbook like I have. Like, you know, the …”
Lee: LPs Have Put on the Brakes for Venture Funds Raising
“Investors, LPs in venture funds have basically put on the brakes. And so any fund that is trying to raise right now is having a pretty hard time for the most part.”
Lee: VC Board Member Withheld Tough Feedback to Protect LP Fundraise
“I called the board member, and I was like, hey, what's your feeling about how this, like, what kind of coaching are you giving the team about how things are going? It feels like things are off, and we are not doing the things we should be doing. And he was lik…”
Lemkin: Top-Tier University Endowments Averaged 90% Venture IRR in 2021
“Do you have so much better data, or at least historically, but do you know what the average top tier university endowment adventure did last year? The IRR? ... 90%.”
Lee: Downturn Years Are Historically the Best Times to Found Unicorns
“When we did the original unicorn analysis, we looked at kind of vintage birth years, and like what were the best years to start or found a unicorn, and generally downturn Years are the best years.”
Lee: Sequoia Redesigned Fund Structure After Realizing Selling Early Sacrificed Returns
“Well, that's, I mean, that's why Sequoia went to this new fund structure, is because they did the analysis, and they showed that by selling too early, they had left a lot on the table.”
Lee: Path to Profitability Conversations Only Start Post-Series B
“I think like once you're past post-series B, that's when you're having the conversation about at your board, with your board and then your investors about path to profitability, I would say.”
Lee: Series A Startups Now Need $5M to $10M Revenue Before Series B
“And then A is really like, you know, can you get from, you know, let's say you know, from post seed, let's say if you're at a million and a half or two million dollars when you raise your A, then you probably need to get to between five and 10 in revenue durin…”
Lee: Founders Raising in 2022 Market Will Face VC Bottom Fishers
“And so, like, if you raise now, if you can avoid it, you're gonna be getting a lot of bottom fissures.”