Quote Info

  1. The number of SaaS IPOs has more than doubled in the past 12 years. t
  2. The number of rounds of financing each company raises before IPO has nearly doubled from 2.5 to 4.5, i.e. Series B/C to Series D/E. These figures exclude seeds, which I’ve defined as rounds less than $1.5M.
  3. The total amount of cash raised before IPO has doubled from the ’98 cohort, adjusted for inflation.
  4. The median round sizes across the life of the company have remained relatively constant.
  5. IPO offerings have increased by about 40% in size
Tomasz Tonguz

More SaaS + Software Stats

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

After $10M in ARR, the median growth rate slows to just under 50%

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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 very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

How to Reduce Churn

55% of SaaS companies rate Customer Retention as the key metric to measure

More Growth Strategy Stats

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

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

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

In 2017, the world invested around 3.4 billion U.S. dollars in small hydropower technologies, down from 3.9 billion U.S. dollars in 2016.

When venture capitalists participate in seed rounds, the average round size is 3x larger

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

How To Make Pricing A Constant Process In Your Organization

Internet Sales strategies have a significantly lower CAC of just $0.42

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