Quote Info

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

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

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

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

SaaS solutions have the highest security features with 95% security failures due to human error

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

How to Reduce Churn

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

High-growth companies generate 60% fewer sales opportunities than low-growth companies

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

More Growth Strategy Stats

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

36% of SaaS businesses managed to reduce their revenue churn over the last 12-months

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

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.

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

Improve Your Pricing Schedule And Turn More Profit

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

When venture capitalists participate in seed rounds, the average round size is 3x larger

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

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