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

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

In 2017, website sales amounted to approximately 300 billion British pounds.

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

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

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

A 1% increase in pricing strategy yields an average 11% increase in profit

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

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

More Growth Strategy Stats

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

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

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

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

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

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”

The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

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