art 1 of the survey results focuses on growth rates, go-to-market trends and cost structure. A new highlight in this year’s survey is data on balancing growth and profitability in SaaS companies, commonly known as The Rule of 40%.
You can find Part 2 results here. Part 2 compares application delivery methods, covers more on operational costs, and offers data on gross margins, contract terms, churn rates, capital requirements and accounting methods.
We’ve also created the forEntrepreneurs 2016 SaaS Infographic. The infographic pulls together major takeaways from the SaaS Survey and ties in advice and insights on key metrics.
As expected, many of the fastest growing companies are among the smallest. Eliminating them brings median growth rates down ~10 percentage points. Median growth rates are consistent with last year’s results. However, this year’s respondent pool was more evenly distributed.
Survey results indicate that companies in the $7.5MM-$15MM range are among the fastest growers. The median growth in this range is much greater than the median of companies half their size. Interestingly, there was a similar bump-up last year, but for companies between $5MM-$7.5MM.
Forentrepreneurs80% of venture capital investments take place in the enterprise
Growing faster has twice as much impact on share price as improving margins
At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR
Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013
After $10M in ARR, the median growth rate slows to just under 50%
Cloud-hosted applications have a 99% uptime
Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)
73% of organizations indicated nearly all their apps will be SaaS by 2021
Google only has a 30 percent female workforce
Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts
Internet Sales strategies have a significantly lower CAC of just $0.42
A 1% increase in pricing strategy yields an average 11% increase in profit