2020 and 2021 were wild times, and thus, in 2022 we saw a financial reset. With this, came adjustments across both public and private markets (read: startups).

And headlines like the ones below were quite common to see, and will likely persist through 2023.

But what does this mean from a sales perspective?

The answer is as always, it depends.

If your startup raised a lot of money in 2021 / early 2022, the good news is hopefully there is enough cash runway to keep the business going, even if not profitable, for another 2-3 years or longer.

The bad news is that venture capitalist (VC) and private equity (PE) money doesn’t come for free.

Likely a lot of funding for software as a service (SaaS) startups that was raised in the 2021 timeframe, was based on inflated expectations of future revenue.

The best startups are expected to grow 3x for 3 years, then 2x for the remaining 2 years.

With these assumptions in mind for growth, you can imagine how some of the hotter startups (think: AI, AR/VR) could raise money at insane multiples on revenue – in certain cases over 50x of current annual recurring revenue (ARR)!

Hopefully you can see where this is going. At VC-backed startups especially, revenue expectations usually end up landing squarely on the shoulders of the sales team.

This responsibility is even further amplified after a Series A/B round has been raised, as the CEO has likely moved away from the day-to-day founder-led sales.

Maybe revenue can catch up

Now, if your startup has good product-market fit, or has a customer-centric engineering team, or even just a kickass product, these overinflated expectations from investors may not be a problem.

Revenue will eventually catch up to expectations after a couple of years. But, if this is not the case – guess what – your ass is on the line.

Because if your sales team grows revenues 1.75x instead of 3x (which is still pretty good in certain market conditions!), there is a good chance the board and the startup’s investors will not be happy and heads will roll.

Usually sales management (like the VP of Sales), but underperforming sales development reps and account executives are at risk too.

Now, if you are a top performer, even if you miss quota, chances are you are a lifeline for the startup – they will not get rid of you.

However, if a poor product, market fit or other external factors are holding you back from making an impact and making money, there are a few ways you can start preparing yourself as a sales person.

Always keep an emergency fund for a rainy day.

You just never know. The company’s cash situation might seem OK, until it isn’t. Rule of thumb in slower economies is 6 months of expenses. I like 12 months, as it relieves any financial pressure off me and I don’t have any day-to-day fear or worries about money.

Negotiate a good compensation plan.

Especially if you are a top performer, negotiate a competitive base ($120K+ ideal) and a plan that gives you good percentages of sales.

This commission rate can range from 10-15% (I know, this is higher than normal). The math may not work out for the company to pay you this much long term, unless they are under pressure to show revenue fast.

Startups where things aren’t perfect are great opportunities to receive stellar compensation plans, even with a shorter track record or less years of sales experience.

Keep an eye out for new opportunities.

Build a target list of companies that you could see yourself working at.

If recruiters reach out from this target list, take the call. Be open to new opportunities from other companies that come through, even if they fall outside of your target list.

You never know if an opportunity might end up being a good fit. At the same time, don’t waste too much time and mental bandwidth interviewing – you still have deals to close at your current job. I would say 4-5 hours per month is doable.

Assuming a 50 hour work week, this is around 2-3% of your working hours.

Don’t sweat it, but just be prepared

All in all, big VC raises are a mixed bag for sales teams. On one hand, the company has more financial runway and time to weather slower market conditions. On the other hand, the pressure to back up the company’s latest valuation is real.

Be aware that VC funding is a necessary fuel for companies to grow aggressively.

But don’t lose sight of what funding really is – a loan that investors provide to a company, with the expectation of growing the value of the shares they receive in exchange for capital.

I’ve seen a comparison of funding to a mortgage loan on a house. It isn’t totally off base.

At the end of the day, if money isn’t coming into your startup in the form of new deals won and upsells, start looking. As a salesperson you are the quickest to get blamed – be aware and be informed, with your eyes wide open.