Are Procurement and Security the Gatekeepers? Customer Evidence for Investors

A SaaS company presents its growth story to potential investors. Revenue expansion slowed last quarter, but the explanation seems reasonable: enterprise customers now require longer security reviews. Procurement cycles have extended. The product works, but bureaucracy creates friction.

The narrative feels plausible. Most B2B software companies face these headwinds. But experienced investors recognize a pattern: operational friction often masks deeper product-market fit issues. The question isn't whether procurement and security reviews exist—they always do. The question is whether they're the actual constraint or a convenient explanation for stalled deals.

Traditional due diligence methods struggle to distinguish between these scenarios. Reference calls with cherry-picked customers provide limited signal. CRM data shows deal stages but not underlying dynamics. Win-loss surveys suffer from selection bias and shallow responses. Investors need direct evidence about what actually drives and blocks customer decisions.

This gap explains why sophisticated investment teams increasingly conduct their own customer research during diligence. Not surveys. Not panels. Actual conversations with the company's customers, prospects, and churned accounts. The evidence that emerges often contradicts the narrative—in both directions.

The Procurement Narrative Under Investigation

Consider a recent case involving a mid-market analytics platform seeking Series B funding. The company attributed elongated sales cycles to procurement complexity. Their data showed average deal time increasing from 4 months to 7 months over the previous year. Management framed this as market maturity—larger customers meant more stakeholders and formal processes.

The investment team conducted 40 customer conversations across three segments: closed-won deals, active opportunities, and lost deals. The procurement explanation appeared in every category, but the underlying dynamics differed substantially.

Won customers described procurement as procedural but not problematic. One enterprise buyer explained: "Procurement took six weeks, but we'd already decided. We were just working through their standard process. The real evaluation happened in the first month when we tested the product with our team." Another noted: "Security review was thorough but straightforward. They had all the documentation ready. It was actually faster than our previous vendor."

Active opportunities told a different story. Multiple prospects cited procurement delays, but deeper questioning revealed stalled technical validation. One prospect initially blamed "budget approval processes" but later acknowledged: "Honestly, we're still not sure it integrates cleanly with our data warehouse. Procurement is waiting for us to confirm the technical fit." The procurement delay was real, but it was waiting on unresolved product questions, not driving the timeline.

Lost deals showed the starkest pattern. Procurement appeared as a reason in 60% of cases, but follow-up questions uncovered different root causes. A common sequence emerged: initial enthusiasm, technical pilot revealing limitations, deal momentum stalling, procurement review becoming the official explanation for no decision. As one former champion explained: "We told the vendor it was a procurement issue because that felt easier than explaining that the product didn't actually solve our core workflow problem."

The evidence painted a clear picture. Procurement processes existed uniformly, but they only became barriers when underlying conviction was weak. For customers who saw clear value, procurement was a procedural step. For uncertain buyers, it became a convenient exit ramp.

Security Reviews as Signal Not Noise

Security review delays present similar interpretive challenges. Every B2B software company faces security scrutiny, particularly in regulated industries. But the nature of that scrutiny reveals important signals about product positioning and competitive strength.

An infrastructure software company seeking growth equity cited security reviews as the primary constraint on expansion velocity. Their target market—financial services firms—maintained rigorous security standards. Reviews typically required 3-4 months, limiting the company's ability to scale new customer acquisition.

Customer conversations revealed nuanced dynamics. Security reviews did take 3-4 months, but the pattern differed between successful and unsuccessful deals. Won customers described security teams as thorough but collaborative. One CISO explained: "We put every vendor through the same process, but we prioritize based on business urgency. When the business unit really needs something, we staff it appropriately and work through issues quickly."

The key phrase: "when the business unit really needs something." Security review duration correlated with business urgency, which correlated with product value perception. Products solving urgent problems moved through security faster because business stakeholders applied pressure and resources. Products with marginal value propositions languished in security review because no one prioritized completion.

Lost deals showed a distinct pattern. Security reviews frequently stalled on specific technical questions that revealed architectural limitations. One security team noted: "We asked about their encryption implementation and got vague answers. That's usually a sign the product wasn't built with security as a first-class concern. We can work with vendors to improve security, but only if the business case is compelling enough to justify the investment."

The evidence suggested security reviews weren't blocking deals—they were revealing products that hadn't earned sufficient business conviction to warrant security team investment. The review process functioned as a filter, exposing deals with weak underlying momentum.

What Customer Evidence Actually Reveals

Systematic customer conversations during diligence uncover patterns invisible in company-provided data. These patterns fall into several categories that help investors assess whether operational friction represents genuine market dynamics or symptoms of deeper issues.

First, conviction strength becomes measurable. Customers with strong product conviction describe procurement and security as procedural hurdles, not decision factors. They use language like "we had to go through" rather than "we're stuck in." They reference specific business outcomes that justified navigating bureaucracy. One customer explained: "Yes, procurement took two months, but we would have waited six months because the ROI was obvious. We calculated we'd save $400K annually."

Weak conviction manifests differently. Customers use passive language about processes happening to them rather than obstacles they're actively overcoming. They struggle to articulate specific value drivers. When asked why they're pursuing the purchase despite delays, answers become vague: "It seems like a good tool" rather than "it solves our specific problem with X."

Second, competitive dynamics emerge clearly. Strong products face procurement and security reviews but win despite them. Customers describe the vendor's competition as inferior even when those competitors might have easier procurement. One buyer noted: "The incumbent had an existing security approval, which would have been easier, but their product was two years behind. We were willing to go through a new security review for better functionality."

Weak competitive positioning shows up when customers mention procurement or security friction as reasons to consider alternatives. "We're also looking at [competitor] because they're already approved" signals that the products are interchangeable enough that procurement convenience becomes a differentiator.

Third, organizational alignment becomes visible. Products with strong internal champions navigate bureaucracy more effectively. Champions describe actively managing the procurement and security process: "I met with security weekly to answer questions and keep things moving." They take ownership of the outcome.

Products lacking champions drift through processes without active management. No one takes responsibility for pushing things forward. Conversations reveal multiple stakeholders but no clear owner. This pattern predicts future churn risk even if the deal eventually closes—products without champions rarely achieve full adoption.

The Methodology That Surfaces Truth

Extracting reliable evidence from customer conversations requires specific methodological approaches. Traditional reference calls fail because they're structured as validation exercises rather than discovery. Customers know they're speaking with potential investors and moderate their responses accordingly.

Effective investor research uses different framing. Rather than asking customers to validate the company's value proposition, questions explore the customer's decision-making process and organizational dynamics. The goal is understanding how decisions actually happen, not confirming that the product works.

Sample question sequences that reveal truth:

Instead of "How long did procurement take?" ask "Walk me through your buying process from initial evaluation to contract signature. Where did things move quickly and where did they slow down? What drove those different paces?"

Instead of "Did you face security concerns?" ask "Tell me about your security team's involvement. What questions did they raise? How did those get resolved? Were there any points where security review revealed something unexpected about the product?"

Instead of "Why did you choose this vendor?" ask "What problem were you trying to solve? What alternatives did you consider? What would have happened if you'd done nothing? Looking back six months later, did the product solve the problem you expected?"

These questions elicit narratives rather than assessments. Narratives contain details that reveal underlying dynamics. A customer who says "procurement took three months" provides minimal signal. A customer who explains "procurement took three months because we had to get VP approval for the budget, which required building a business case with finance, which meant running a pilot to get usage data, which took six weeks because we had to wait for the development team to have capacity for integration" reveals the actual constraint: integration complexity, not procurement process.

The most valuable evidence comes from customers who initially cite procedural friction but, through layered questioning, reveal the underlying dynamics. This requires creating conversational space for customers to think through their own experience rather than repeating practiced explanations. Modern research methodology emphasizes this kind of adaptive questioning that follows the customer's narrative rather than imposing predetermined structure.

Pattern Recognition Across Deal Stages

Procurement and security friction manifest differently across the customer lifecycle. Sophisticated investors look for consistency or inconsistency in these patterns as evidence of underlying product strength.

In early-stage deals, strong products generate urgency that overcomes procedural friction. Customers find ways to accelerate processes or accept delays because the problem is acute. One customer explained: "We actually started using the product before procurement finished the contract because we couldn't wait. We had our legal team draft a short-term agreement so we could get started." This behavior signals genuine urgency.

Mid-stage deals reveal whether initial enthusiasm sustains through bureaucracy. Strong products maintain momentum. Champions continue pushing. Weak products see engagement decline during procurement and security review. The buying team becomes less responsive. Timeline estimates keep extending. These signals predict deals that will eventually be marked as "lost to no decision."

Post-sale, the same patterns predict expansion and retention. Customers who navigated procurement and security because of strong conviction tend to expand usage and renew reliably. Customers who barely cleared those hurdles often show weak adoption and eventually churn. One customer explained their renewal decision: "We spent six months getting through procurement and security the first time. The product never really delivered the value we expected, but we'd invested so much in the buying process that we used it for a year before admitting it wasn't working."

This pattern—sunk cost driving initial retention followed by eventual churn—appears frequently in companies that blame procurement and security for slow growth. The real issue is weak product-market fit creating customers who barely clear the buying threshold and never become strong advocates.

Competitive Intelligence From Procurement Stories

Customer conversations about procurement and security processes reveal competitive dynamics that companies rarely disclose. Customers naturally compare their experience across vendors, providing investors with ground-truth competitive intelligence.

One pattern that emerges: customers describe procurement and security as more burdensome for weaker products because they're comparing multiple options simultaneously. A customer evaluating three analytics platforms explained: "Vendor A had all their security documentation ready and answered questions within 24 hours. Vendor B took weeks to respond to basic questions. Vendor C was somewhere in between. The security team told us Vendor B's delays suggested they hadn't been through this process with many enterprise customers, which made them nervous about maturity."

The procurement experience became a signal of organizational maturity and enterprise readiness. The company that blamed security review delays for slow growth was actually revealing that their security documentation and processes lagged competitors. Customers were making relative judgments, not absolute ones.

Another competitive signal: how customers describe vendor responsiveness during procurement and security review. Strong vendors assign dedicated resources to help customers navigate these processes. One customer noted: "They gave us a security champion who joined calls with our team and had answers to everything. It felt like they'd done this a hundred times before." Weak vendors leave customers to navigate alone, creating friction that competitors exploit.

Investors can assess competitive strength by asking customers: "How did this vendor's procurement and security process compare to others you've worked with?" The answers reveal whether the company's experience represents market baseline or competitive disadvantage.

When Friction Is Actually Friction

Legitimate procurement and security friction does exist. Some deals stall for reasons unrelated to product quality. Investors need to distinguish between systemic market friction and company-specific issues.

Systemic friction shows consistent patterns across customers. Every customer in a particular industry or segment describes similar challenges. Timelines cluster around similar durations. The obstacles cited are structural—regulatory requirements, industry-standard security frameworks, mandatory procurement processes that apply to all vendors equally.

One cybersecurity company faced genuine systemic friction. Every customer in financial services required 6-9 month security reviews regardless of vendor because of regulatory requirements. Customer conversations confirmed this uniformly. More importantly, customers didn't cite competitors as having easier processes—all vendors faced identical scrutiny. The friction was real and market-wide, not company-specific.

Company-specific friction shows variation. Some customers move quickly while others stall. Customers mention competitors having smoother processes. The obstacles cited relate to the specific vendor's approach, documentation, or product architecture rather than industry-wide requirements.

The distinction matters for investment decisions. Systemic friction affects all players equally and often represents market opportunity for solutions that reduce that friction. Company-specific friction suggests competitive disadvantage that may worsen as stronger competitors emerge.

The Questions Investors Should Ask

When a company cites procurement and security as growth constraints, specific questions help investors assess whether this explanation holds up:

"Walk me through a recent deal that closed. How long did procurement and security review take? What happened during that time? Who was driving the process forward?" This reveals whether won deals show the same friction or whether friction correlates with weak conviction.

"Tell me about deals that didn't close. When they stalled, where in the process did that happen? What reasons did customers give? What do you think the underlying issues were?" This tests whether the company understands the difference between stated and actual reasons for lost deals.

"How does your procurement and security review process compare to competitors? Do customers mention this as a differentiator?" This reveals whether the company has competitive intelligence about relative friction levels.

"What have you done to reduce procurement and security friction? What worked and what didn't?" This tests whether the company treats this as a solvable operational problem or an external force beyond their control.

"Can you connect me with customers who faced long procurement or security reviews? I'd like to understand their experience." This tests whether the company is confident in their narrative or concerned about what customers might reveal.

The answers to these questions, combined with direct customer evidence, usually clarify whether procurement and security represent genuine market dynamics or symptoms of weak product-market fit.

Building Evidence-Based Conviction

Sophisticated investors increasingly use systematic customer research as a core diligence tool. Not to validate what the company claims, but to understand ground-truth market dynamics. The methodology matters significantly.

Traditional approaches—reference calls with company-selected customers, win-loss surveys with low response rates, CRM data analysis—provide limited signal. They confirm what the company already believes but rarely reveal contradictory evidence.

Modern approaches use conversational AI to conduct dozens of customer interviews rapidly during diligence windows. Platforms built for this purpose can interview 40-50 customers in 48 hours, providing statistical power and pattern recognition impossible with manual methods. The conversations are natural and adaptive, following customer narratives rather than rigid scripts.

One growth equity firm routinely conducts 50 customer conversations during diligence for B2B software deals. Their managing partner explains: "We've passed on three deals in the last year where the company blamed procurement and security for slow growth, but customer conversations revealed weak product-market fit. In each case, we would have invested based on company narrative and traditional diligence. The customer evidence saved us from bad investments."

The same firm has also invested in companies facing genuine procurement and security friction because customer conversations confirmed strong underlying conviction. "When customers say 'yes, procurement took six months, but we would have waited a year because this product solves a critical problem,' that's a signal to invest, not pass."

The Broader Pattern Recognition

The procurement and security question represents a broader pattern in investment diligence: companies attribute challenges to external factors when internal factors often dominate. Sophisticated investors develop pattern recognition for these explanations.

"The market isn't ready yet" often means "we haven't found product-market fit."

"Customers love the product but implementation is complex" often means "the product doesn't integrate well with existing workflows."

"We're competing against free" often means "we haven't articulated differentiated value."

"Enterprise sales cycles are just long" often means "we haven't created urgency."

Each explanation contains partial truth. Markets do have maturity curves. Implementation can be complex. Free alternatives exist. Enterprise sales take time. But these factors affect all players in a market. Companies with strong product-market fit overcome them more effectively than companies with weak fit.

Customer evidence reveals which scenario applies. Customers with strong conviction overcome obstacles. Customers with weak conviction cite obstacles as reasons for inaction. The pattern emerges clearly across 30-50 conversations in ways invisible from 3-5 reference calls.

Implications for Investment Decisions

When procurement and security friction represents genuine market dynamics rather than weak product-market fit, the investment implications differ substantially.

Genuine market friction creates opportunity for companies that solve it. If every vendor faces 6-month security reviews, the company that reduces this to 3 months gains significant competitive advantage. If procurement processes universally slow deals, the company that streamlines procurement gains velocity. These become investable operational improvements.

Weak product-market fit masked as procedural friction suggests deeper problems. The company needs product improvement, positioning refinement, or market repositioning—not operational optimization of procurement and security processes. Investment in growth will likely accelerate customer acquisition of marginally satisfied customers who eventually churn.

Customer evidence clarifies which scenario applies. One growth equity firm uses a specific framework: if 70% or more of customers describe procurement and security as procedural rather than problematic, and if won customers show strong conviction despite these processes, the friction is genuine but manageable. If fewer than 50% of customers show strong conviction, or if lost deals consistently cite procurement and security as reasons for no decision, the friction likely masks weak fit.

The firm's track record supports this framework. Investments in companies passing the customer conviction test have generated median 3.2x MOIC over 4-year holds. Investments in companies failing the test—where they invested before implementing this diligence approach—generated median 1.1x MOIC over similar periods.

The Evidence-Based Investment Thesis

Procurement and security reviews are gatekeepers, but they're not arbitrary ones. They filter for products with sufficient business value to warrant organizational investment in evaluation and onboarding. Strong products clear these gates consistently. Weak products struggle, then cite the gates as the problem.

Investors who rely on company narratives and traditional diligence methods often cannot distinguish between these scenarios. The data looks similar—elongated sales cycles, procurement delays, security review timelines. The underlying dynamics differ fundamentally.

Direct customer evidence reveals these dynamics. Not through surveys asking customers to rate the product, but through conversations exploring how decisions actually happen within organizations. The patterns emerge clearly: conviction strength, competitive dynamics, organizational alignment, champion engagement.

As one investor explained: "We used to take company explanations at face value. Market friction seemed like a reasonable explanation for slow growth. Then we started doing systematic customer research and realized we'd been missing the signal. The companies that blamed external friction usually had internal problems. The companies that acknowledged their challenges and showed us evidence of strong customer conviction despite those challenges—those were the ones that delivered returns."

The methodology continues evolving. Modern platforms enable investor teams to conduct 50-100 customer conversations during typical diligence windows, providing statistical confidence impossible with traditional approaches. The conversations themselves have improved—more natural, more adaptive, better at uncovering unconscious motivations and unstated concerns.

The result is investment decisions grounded in customer evidence rather than company narrative. When a company says procurement and security are slowing growth, sophisticated investors now respond: "Let's talk to your customers and find out." The conversations that follow usually provide the answer.