For SaaS companies valued at over $1billion, the median amount of financing raised is $206million

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].

More Tech Services Stats

Software and online services are in a period of dizzying growth

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

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

In 2019, spending on IT services is expected to amount to 1,016 billion U.S. dollars worldwide

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

56% treat “Existing Customer Renewals” as high priority

Companies with longer contracts (2+ years) reported the lowest annual unit churn

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

The venture-backed companies that were acquired most often had a 7 percent share of female execs, as opposed to 3 percent at unsuccessful (unacquired) firms

When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

More Growth Strategy Stats

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%

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

Women in western countries use the internet 17 percent more than their male counterparts

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

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

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available