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

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).

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SaaS + Software Stats

• The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn
• Internet Sales strategies have a significantly lower CAC of just $0.42
• The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month
• Analysed 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
• The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8
• Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts
• How Often Should The Pricing Committee Be Meeting And Making Changes?
• 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%)
• When venture capitalists participate in seed rounds, the average round size is 3x larger

SaaS & Tech Growth Strategy Stats

• Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015
• It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue
• Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50
• How Often Should The Pricing Committee Be Meeting And Making Changes?
• 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
• In 2018, the U.S. imported aerospace products worth about 53.98 billion U.S. dollars.
• Growing faster has twice as much impact on share price as improving margins
• The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months
• Invention is 10% inspiration and 90% perspiration.