The software spend squeeze is lessening, new data from Battery Ventures indicates. According to the venture capital firm’s survey of enterprise firms with 100 C-suite leaders at companies around $35 billion in annual IT spend, contract approval timelines are no longer stretching longer, and focus on cutting SaaS spend more generally is fading.
For startups that sell software, the market may be stabilizing.
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However, the same dataset indicates that bottom-up growth — a key method for startups to sell to larger customers — is under increasing pressure. Selling to an individual, later a team and perhaps in time a whole company is one way that smaller companies can land large, lucrative accounts. But the path for such sales could be narrowing, per Battery.
TechCrunch+ wrote extensively about the bottom-up sales approach often during the pandemic, when it and product-led growth more generally became hot terms. But like many things that got big during the pandemic and its ensuing economic disruption, what goes up inevitably comes down.
This morning we’re digging into the Battery data on bottom-up sales and closing with a few notes on the rest of what the venture group found in its recent survey. The kicker is that if you are selling AI-related software tools or tooling, you are probably having a better year than your friends who are building non-AI products.
Bottoms up!
For a long time, developers were often free to choose the software solutions they wanted to use, especially if they were being picked for testing purposes. That activity was a Trojan horse for B2B startups that could then call the developers’ bosses to land organization-wide deals for their software. But that route seems to be closing up.