Why Are “Good” SaaS Startups Struggling So Much Right Now?

Read time: 3 minutes.

Welcome to the 178th edition of The Growth Elements Newsletter. Every Monday and sometimes on Thursday, I write an essay on growth metrics & experiments and business case studies.

Today’s piece is for 8,000+ founders, operators, and leaders from businesses such as Shopify, Google, Hubspot, Zoho, Freshworks, Servcorp, Zomato, Postman, Razorpay and Zoom.

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If you have a SaaS startup that’s profitable, growing steadily, and serving happy customers, but you’re still facing trouble raising money or accelerating revenue, you’re not alone.

This is a defining challenge for founders in 2025.

What’s Really Happening?

[1] Investor capital is selective

• Money now flows mainly to startups promising fast, AI-driven growth.

• Solid but slower SaaS growth doesn’t attract the same attention.

[2] Buyer budgets are maxed out

• Enterprise and SMB customers have limits on how many tools and licenses they purchase.

• Procurement teams are pushing back hard on renewals and new deals.

[3] Valuations are compressing

• SaaS businesses without a strong AI narrative or vertical specialisation face multiple declines, even with healthy revenue.

[4] Competitive pressure is intense

• AI startups and nimble new entrants are out-investing and out-marketing traditional SaaS, shrinking your share of mind and capital.

What Can You Do?

[1] Focus on retention and expansion

• It’s cheaper and faster to grow revenue among your existing customers than to find new ones.

• Build strong success programs.

[2] Reassess product-market fit 

• Regularly confirm that your product solves the urgent problems customers prioritise.

• Don’t chase features that aren’t buying triggers.

[3] Cut waste ruthlessly

• Stop marketing campaigns and sales efforts without clear conversion paths.

• Force every activity to prove ROI.

[4] Invest in AI and automation

• Even simple AI features improve customer experience and open new sales conversations.

Why It Matters

Navigating this new reality separates surviving SaaS startups from fading ones.

Your ability to adapt quickly and focus on high-leverage areas will determine whether you grow or plateau.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria