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In other words, the typical round size for SaaS companies hasn’t changed materially over the past 16 years but the number of rounds has doubled, which has doubled the amount of capital a startup raises in aggregate before IPO. At least on the surface, the data indicates SaaS companies aren’t more efficient.

That pattern may be driven by an increasingly friendly financing environment or because of increased capital needs of the business or many other reasons. So the next question to answer is capital efficiency. In a future analysis, I’ll calculate the ratio of revenue dollars to VC dollars invested to get a sense of the reality of cloud capital efficiency per revenue dollar.

Tomasz Tonguz

More SaaS + Software Stats

55% of SaaS companies rate Customer Retention as the key metric to measure

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.

Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues

Growing faster has twice as much impact on share price as improving margins

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

More Growth Strategy Stats

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How to Reduce Churn

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

47% of millennials want to work at diverse companies, according to a recent study.

The median annual unit churn for SAAS companies was 10% in 2016

Analyzed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

26% of SAAS companies with at least $15MM in GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher.

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

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