Statistic Info

These businesses grow from 10k to 93k in MRR in their first year of commercialization and then to 413k of ending MRR in their second.

On average, they raise $9.5M in Series A, though there is a range from smaller rounds of $3M to rounds of greater than $20M. That range is more indicative of the breadth of different rounds the market calls Series As. The average is more representative.

The average round size has been increasing by 11% annually. And this growth parallels the overall startup Series A size which has reached similar highs to rounds in 2000.

As round sizes have increased, so too has MRR at the time of the series A. Companies in the set who raised in 2014 recorded $50k in MRR at the time of the A. That figure has grown each year by 80%, and for the investments that closed in early 2016, that figure reached $163k. The increase is driven both by larger seed round sizes enabling companies to raise later, hence more MRR, and also the greater expectations in the fundraising market given larger check sizes sought by founders.

Surprisingly, 27% of these companies raise Series A with $0k in MRR, before the business has commercialized the software. At this point, investors are betting on the team’s unique backgrounds, approach to the market or some other characteristic of the opportunity.

Unlike later rounds, Series A pricing has no correlation to MRR or next-twelve-months (NTM) revenue, which is a proxy for growth rate. This lack of a relationship indicates the Series A market pricing is more of a function of supply and demand and the ability of the founders to engender an active auction, than a mark-to-market pricing event.

Tomasz Tonguz

More SaaS + Software Stats

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

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

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%”

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

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

The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense