When venture capital firms like Craft—co-founded by David Sacks, a PayPal mafia member and tech industry heavyweight—start tightening their belts, it signals broader shifts in the funding landscape that directly impact your marketing strategy.
Here's what this means for startup marketers:
- First, the days of growth at all costs are truly over. VCs are looking for efficiency and sustainable unit economics. Your marketing plans need to reflect this reality.
- Grow at all costs really took a hit in 2022 when interest rates went up - but this is another blow that will likely impact spend
- If you've been operating with the assumption that you can burn cash to acquire customers and figure out profitability later, it's time to recalibrate. VCs are increasingly skeptical of this approach, and your next funding round might depend on demonstrating responsible spending.
What does this look like in practice? It means shifting even further to profitability metrics. Instead of celebrating top-line growth or total customer count, focus on:
- Customer acquisition cost (CAC) relative to lifetime value
- Payback periods on marketing spend
- Retention rates
- Marketing efficiency ratio (MER)
The VC belt-tightening also means you'll likely need to do more with less. Craft's layoffs suggest that even well-established funds are preparing for leaner times ahead. This will inevitably trickle down to portfolio companies in the form of more scrutiny around spending.
Smart leaders will proactively audit their marketing stack, agency relationships, and campaign performance. Look for opportunities to consolidate tools, renegotiate contracts, and cut underperforming channels.
As an agency, we’ve already had clients request for some flexibility here as well. Our fee model here is tied to % of revenue driven - and we’re expecting lower fees as margins compress and breakeven ROAS goes up. Though we’re hoping that cheaper media costs from less competitive auctions offsets that a bit.
Efficiency also isn't just about cutting costs—it's about maximizing impact per dollar spent. This might be the perfect time to double down on content marketing, referral programs, and other high-ROI channels that don't require ad spend.
From a messaging perspective, this market shift requires adaptation too. The story you tell investors, customers, and even your team needs to evolve. Instead of emphasizing rapid growth and market domination, highlight sustainability, resilience, and capital efficiency. Surviving through some uncertain times.
The marketers who adapt fastest to this new reality will emerge stronger on the other side.
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