.

When Potential Investors Don’t Like the Market

Last week, I was catching up with an entrepreneur who was lamenting how potential investors didn’t like his market. It reminded me of the early days at Pardot. We were about three years into the busin

David Cummings
See Profile
September 27, 2025

Last week, I was catching up with an entrepreneur who was lamenting how potential investors didn’t like his market. It reminded me of the early days at Pardot. We were about three years into the business, had over $1 million in annual recurring revenue, and were growing 200% year over year. By all accounts, especially in that era of SaaS, we were onto something special.

Wanting to grow even faster and capture an unvented market, we set out to raise a venture round. After trips to Boston, Washington D.C., and California multiple times, we kept hearing the same feedback: investors liked our progress, but they didn’t like the market.

At the time, we were selling marketing automation software to small and midsize companies, delivering a clear ROI in the form of increased revenue through a variety of business tools for managing and executing online campaigns. But in the eyes of investors, there was a big problem: they couldn’t point to any other prominent success stories in marketing technology. No publicly traded companies. No recent high-flyers with great exits. There was no context for marketers buying software products.

Of course, we did our best to provide analogies. If you looked across the common departments in a company—sales, accounting, HR—every department had a platform of record. For sales, it was Salesforce. For accounting, it was QuickBooks or Oracle Financials. And so on. But marketing? Marketing had no platform of record. Marketers at the time were using a hodgepodge of tools like Mailchimp and Google Analytics. These worked fine as siloed solutions for consumer marketers, but business marketers had different needs.

By offering one comprehensive solution that integrated well with other products, performance and results were dramatically better. We tried to frame it for investors like this: if you look at Salesforce and the number of CRM seats they were selling, our product as a business marketing automation platform was the ultimate complement. Every company using a CRM in the future would also use marketing automation. We argued that marketing automation would become a material percentage of the size of the CRM market, and since the CRM market was growing fast, marketing automation would grow even faster.

In hindsight, we weren’t successful at convincing investors of the market opportunity. But through a fortunate combination of luck and timing, the market exploded anyway. We were able to dramatically grow the business without raising a round of funding.

For entrepreneurs pitching investors who don’t buy into the market opportunity, it can be incredibly difficult. The best approach is to find an analogous market or a complementary product and make the case that what happened “over there” is going to happen “over here.” Even if investors aren’t convinced, the one thing within your control is to provide tremendous value to your customers and grow at least as fast as the market itself so that when the opportunity arises, you’re in the best position to raise capital and scale even faster.

You might also enjoy...