New SaaStr on 20VC! "The VC Playbook: What's Working in 2025"
"There's a clear box companies need to be in, and if you're in it, capital is plentiful."
We've back this week on 20VC with Harry and Rory from Scale for another great deep dive on the latest in VC funding and more. We kick off with a quick deep dive on Vertical SaaS leader for restaurants Owner raising at $1 Billion -- a deal SaaStr Fund led at seed. Why was it so hot?
5 Key Takeaways
Capital is plentiful for the right metrics: Companies growing 10%+ MoM with $40M+ ARR can still close $100M+ rounds in days, while Series A rounds overall are down 81%. The divergence between haves and have-nots has never been greater.
AI is creating urgency but also fear: CMOs and other executives are buying AI tools out of fear of becoming obsolete, creating a gold rush for companies like Clay that position themselves as job-saving solutions.
The trillion-dollar investment thesis: VCs are now evaluating deals based on "odds of trillion-dollar outcome" rather than traditional metrics, justifying seemingly irrational valuations (like Perplexity at $14B) for companies with even a small chance at massive outcomes.
Non-technical CEOs can win in AI: Despite conventional wisdom, OpenAI is dominating with non-technical leadership because they excel at recruitment, empowerment, and strategic partnerships.
Winning today requires aggressive capitalization: The playbook for category winners is to raise more than needed and "scorched earth" the competition, as the pace of innovation and competition in AI-enabled categories is unprecedented.
Why Series A Is Hard (But Great Companies Still Get Funded)
Reports show Series A rounds are down 81% - but this is actually normal. The seed round is the "believe in the team" round, while Series A is the "show me the traction" round. And traction is hard to manufacture.
The key insight: Don't go fundraising for a Series A unless you're certain you have what it takes. Smart companies sometimes choose to delay raising until they have undeniable metrics.
For founders: If you've built a B-tier startup that could get funded in 2021 but can't today, that's just market reality. The bar has gone up. The best startups with stellar metrics still get 5+ term sheets.
The New Fundraising Timeline: Preempts Getting More Aggressive
The competition for quality deals has become so intense that Series A investors are asking "how quickly after the seed can we preempt?" Often this happens just 2-3 months after a company's seed round.
Why this works: If a company has grown 50% in just two months since you first met them and you've already done your diligence, why wouldn't you move? The best companies in high-growth markets have the highest velocity of fundraising.
Hard truth: If you're not tracking your top 10-20 companies you want to invest in over the next 12 months, you're doing it wrong. The days of "wandering around hoping stuff will turn up on Monday that will make you money by Wednesday" are over.
Owner's $120M Round: What It Tells Us About 2025's Funding Environment
Owner just raised $120M at a $1B+ valuation with $40M ARR growing 10% month-over-month. The process? Open the data room on Monday, get term sheets that afternoon, and close by Wednesday.
The meta lesson: Triple-triple-double-double (3x growth for 2 years, then 2x for 2 years) is still good enough, but if you're growing much faster than that, there's unlimited capital available. There's a clear box companies need to be in, and if you're in it, capital is plentiful.
For investors: If you're hearing about a hot deal for the first time on Monday and need to decide by Wednesday, you're already way behind. The winners are those who've been tracking companies for months, have done their work, and are ready when the opportunity comes.
AI CEO Playbook: Creating Urgency in Your Organization
What we're seeing from CEOs at companies like Klarna is a deliberate strategy: push AI initiatives to the extreme (100%), then dial back as needed.
Leadership insight: It's a management technique. To drive change in large organizations, CEOs must take hyperbolic positions because it's incredibly difficult to move thousands of people. Push until something breaks, then throttle back slightly.
Reality check: Most AI implementations aren't at 100% or 0% - they're on a slider. Data shows only about 2 out of 20,000 customers in one platform moved to 100% AI for customer support. The majority settle around 20-40%, with the most advanced hitting 70-80% with improved NPS scores.
Marketing and AI: What CMOs Are Really Buying
Products like Clay are winning because they're solving an existential threat for CMOs. Every struggling marketer who doesn't understand AI is deploying Clay - it's become the Hopin of 2025 for marketers.
What's actually happening: CMOs are terrified of losing their jobs. They're looking at their teams wondering, "I don't need this writer with ChatGPT available. I just don't need my team, and I can't find the AI wizard who would actually help."
The winning strategy: If you're selling to CMOs (or any C-suite), position yourself as the solution that ensures they won't lose their job. A CMO with a $5-10M budget will happily spend $200K on a tool that might save their career. They'll sign the contract tonight.
OpenAI's Leadership and What It Means for the AI Race
OpenAI now has two non-technical CEOs - Sam Altman and new CEO of Apps, Fiji Simo. Despite this unusual arrangement for a tech company, they continue to dominate with 85%+ market share.
Why it works: Sam Altman may not be technical, but he's an "S-tier" recruiter and leader who's empowered his technical team effectively. This has been a stunning achievement that defies conventional wisdom about technical CEOs.
Future moves: OpenAI is poised to expand far beyond coding and chat. They'll likely move aggressively into the consumer space, particularly in shopping and web traffic - areas where a product-focused, non-technical leader might excel.
The Tiger Global Redemption Arc
Tiger Global made an aggressive strategy in 2021, doing 300+ deals that now look like mistakes. But their positions in OpenAI and Scale could save their fund performance.
Investment lesson: The only way to recover from a troubled portfolio is to place significant bets on moonshots. If Tiger deployed 20% of their fund to OpenAI and 10% to Scale, they could salvage their performance despite hundreds of underperforming investments.
Math reality: It's impossible to dig out of a $12 billion hole in $100 million increments. The only path to redemption is making outsized bets on category-defining companies that can deliver 10x+ returns.
Why Perplexity Raised at a $14B Valuation
Perplexity reportedly raised $500M at a $14B valuation despite having far less revenue than that would typically justify. Why would investors pay this premium?
The trillion-dollar thesis: What Perplexity is selling from an investor perspective is a credible "at-bat" as one of the three companies that matter in AI search (OpenAI, Anthropic, Perplexity). If there's even a 1-in-3 chance of competing for a trillion-dollar prize, that justifies the valuation.
Investment framework: The first question in your investment memo should be "odds of trillion-dollar outcome." If it's north of 2%, do the deal. In a world of fewer, bigger winners, these bets make sense despite the high price.
Clay's AI-Fueled Growth and Competitive Strategy
Clay is seeing explosive adoption among marketing teams frightened about AI disruption. They've become the tool CMOs buy to show they're "doing AI."
Competitive landscape: The space is attracting unprecedented competition. One 19-year-old Stanford dropout already claimed to have a Clay competitor at $2M ARR in just months by making it "easier to use with better data sources."
Strategic imperative: "I would armor up if I were Clay. I would hire everybody, raise another $100 million, and scorched earth everyone in the space." The fear-based buying window won't last forever, so Clay needs to consolidate their position aggressively.
The 2025 Investor's Mantra
The greatest opportunity today is to identify companies with even a small chance of becoming trillion-dollar businesses. Most investment decisions should be evaluated through this lens.
Final thought: "If you're looking at a deal that has all the risk of a classic private company but doesn't have embedded upside beyond the base case, you probably shouldn't do the deal." We're all upside junkies - it's the pixie fairy dust that lands on our portfolio every five or six years that makes the math worthwhile.
5 Unexpected Insights ... That Could Change Your Strategy
The "middle ground" in AI adoption doesn't exist: Most companies talk about AI transformation, but data shows a massive gap - only 2 out of 20,000 customers actually went to 100% AI implementation. The majority hover at just 20% adoption. This means there's a huge opportunity for products that help bridge this implementation gap.
Microsoft's 3% layoffs are "not enough": Top VCs believe that large tech companies aren't cutting deep enough for the AI transition. If you're selling to enterprise, recognize that buying centers are fundamentally changing and the "wrong people" may still control budgets for now.
The next great investor could come from unusual places: Sam Bankman-Fried, despite his legal troubles, was called "astonishing" for his early investments in Anthropic and Cursor - two of the most important AI companies. Great insight can come from unexpected sources, even if their methods are questionable.
Your job needs to change by mid-2026: The consensus is that nearly every job in tech will be fundamentally different in 12-18 months, not in 5 years as commonly believed. This compressed timeline means founders need to rethink their hiring, training and organizational structures now.
The portfolio construction math has changed: If traditionally you needed 20 investments to get 4 winners, now you might need 27-28 investments to get just 3 winners - but those 3 will be much bigger. This principle applies to founders too - you may need to explore more pivots and variations to find your winning model, but when you do, the upside is larger than ever.