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

Tech Services
Statistic in SaaS & Tech Growth Strategy

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

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

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

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%

Negative Churn and Expansion Revenue

At Twitter, 10 percent of tech roles are staffed by women

At Facebook, 15 percent of tech roles are staffed by women

Cloud application services (SaaS) to reach $126 billions by the end of 2021

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%”

More SaaS & Tech Growth Strategy Stats

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

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

The boom in the industry is creating more jobs for techies. Data reveals there were 627,000 unfilled positions in tech in April 2017

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.

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

Growing faster has twice as much impact on share price as improving margins

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

Is your SaaS business viable?

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

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