Statistic Info

When we looked at the fastest growing SaaS companies in our study (those with a CAGR of over 50%) we found an average Quick Ratio of 3.9.

These SaaS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn. They are, in other words, exactly the type of SaaS startup that Mamoon looks for when deciding where to invest.

And, as their high Quick Ratio implies, they have a great chance to continue growing quickly and healthfully, and eventually become one of those fabled SaaS companies with a run rate of more than $10 million.

However, once we started digging deeper, the story became a little more complicated (and more interesting).

InsightSquared

More SaaS + Software Stats

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)

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

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.

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

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

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

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

80% of venture capital investments take place in the enterprise

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

More Growth Strategy Stats

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

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

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%

In 2017, the global adoption rate for biotech soybean amounted to 77 percent.

Improve Your Pricing Schedule And Turn More Profit

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

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

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR