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In the first 3 years, these public SaaS companies spend between 80 to 120% of their revenue in sales and marketing (using venture dollars or other forms of capital to finance the business). By year 5, that ratio has fallen to about 50% where it remains for the life of the business.
Despite the divergent revenue ramps, the marketing and sales spend patterns for these companies resemble each other strongly and serve as good benchmarks for high-growth SaaS startups.
In case you’re curious, below is the “typical” revenue growth trajectory for these SaaS companies: $50M in year five, $100M in year ten.
Tomasz Tonguz
More SaaS + Software Stats
At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR
Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)
When venture capitalists participate in seed rounds, the average round size is 3x larger
55% of SaaS companies rate Customer Retention as the key metric to measure
Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013
SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer
80% of venture capital investments take place in the enterprise
Internet Sales strategies have a significantly lower CAC of just $0.42