All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

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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.

More SaaS + Software Stats

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

How Often Should The Pricing Committee Be Meeting And Making Changes?

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

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

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

More Growth Strategy Stats

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

In 2017, Foxconn Technology Group achieved revenue of 158.15 billion U.S. dollars.

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

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

The average SaaS company spends just 6 hours determining their pricing strategy

Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc

More than 1/2 of SAAS companies increased their spending on customer retention last year

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

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

General Dynamics is a market leader in the aerospace and defense industry. In 2018, a total of 105,600 people were working at General Dynamics.