If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

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In other words, software companies must grow quickly to survive. Slow growing businesses suffer from the lack of oxygen that fuels growth. Raising money is more expensive. Hiring becomes challenging. Without the capacity to invest capital in growth or the ability to compete for top talent, the slow growth cycle reinforces itself.

The McKinsey study breaks down rapid growth into two parts. In part one, the authors identify five key factors of success in the early stages. Large market; logical revenue model; rapid-adoption; stealth/secrecy; proper compensation of the leadership team.

This list will surprise no one, except perhaps for stealth. Is secrecy and stealth a prerequisite to success for every massive software company? For most bottoms-up businesses, stealth isn’t a competitive advantage, but awareness is.

Part two is more interesting. The defining characteristic of enduring software businesses is they “master the transition from one act to the next.” Fast-growth startups must metamorphose constantly because the market demands it of them.

More SaaS + Software Stats

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

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

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

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

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

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

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

Is your SaaS business viable?

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

80% of venture capital investments take place in the enterprise

More Growth Strategy Stats

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

SaaS IPOs have more than doubled over the last 12 years

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

How Often Should The Pricing Committee Be Meeting And Making Changes?

In 2020, China is expected to generate 55 billion U.S. dollars in the global medical technology market.

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

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

Analyzed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

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

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8