Statistic Info

The WSJ published a recent chart of the 49 startups with billion dollar valuations. According to their research, there have never been as many privately held companies with such high valuations ever. The absolute number of these massively valuable companies alone is amazing. Ten years ago, most of them would have gone public by now. But what other insights can we tease from the data about these very special businesses?

First, the Billion Dollar Club (BDC) is nearly evenly split between Consumer and Enterprise companies, as the table below shows. I’ve noted the median dollars raised, the median valuation and the valuation efficiency in the table. The valuation efficiency is the valuation divided by the capital raised. This metric tries to answer the question, how much capital did the startup need to raise to achieve that valuation? This is a somewhat flawed metric[1] but I’m going to use it to compare the relative attractiveness of sectors[2].

Tomasz Tonguz

More Tech Services Stats

In 2018, the revenue of General Dynamics amounted to nearly 36.2 billion U.S. dollars.

In 2018, the U.S. imported aerospace products worth about 53.98 billion U.S. dollars.

Agile projects are twice as likely to succeed as projects run with traditional project management

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

Is your SaaS business viable?

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

80% of venture capital investments take place in the enterprise

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business

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

More Growth Strategy Stats

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”

In 2018, the revenue of General Dynamics amounted to nearly 36.2 billion U.S. dollars.

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

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

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

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

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

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.