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

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

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

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

Customer Segmentation analysis will help point out which are your most profitable segments

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

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%”

Three uses for the SaaS Guidelines

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

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

More Growth Strategy Stats

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

Software and online services are in a period of dizzying growth

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

The median annual unit churn for SAAS companies was 10% in 2016

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

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

orecasts suggest that global blockchain technology revenues will experience massive growth in the coming years, with the market expected to climb to over 23.3 billion U.S. dollars in size by 2023.

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution