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

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).

More SaaS + Software Stats

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

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

54% treat upselling and add-on sales as high priority

Three uses for the SaaS Guidelines

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

Companies with longer contracts (2+ years) reported the lowest annual unit churn

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

56% treat “Existing Customer Renewals” as high priority

More Growth Strategy Stats

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

Is your SaaS business viable?

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

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

56% treat “Existing Customer Renewals” as high priority

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

in 2016, women-led companies received $1.46 billion in investments from venture capitalists. Male-led companies, on the other hand, received $58.2 billion

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

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

At Facebook, 15 percent of tech roles are staffed by women