When venture capitalists participate in seed rounds, the average round size is 3x larger

SaaS + Software
Quote in SaaS & Tech Growth Strategy

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The Fundraising Market is Stable, Despite Public Market Fluctuations. The dollars in and out of the venture market are relatively constant. LPs are investing into venture capital at a steady, and likely increasing rate. Over the last five years, dollars into the venture industry has remained at or below the 12 year median. 2014 looks to be a bit of a stronger year. VCs are investing at a relatively constant pace and at a relatively constant average dollars per investment. The public market correction in consumer and enterprise stocks in February was real and significant, deflating consumer by 25% and enterprise by 40%+. Many of those companies have rebounded some since the lows, but institutional investors have broadly cycled from growth to value stocks. Valuations may be more varied but total capital invested in startups is constant.

Tomasz Tonguz

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It’s 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue

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

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

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

56% treat “Existing Customer Renewals” as high priority

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

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

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

More SaaS & Tech Growth Strategy Stats

Is your SaaS business viable?

SaaS organizations are now operating in over 100 countries

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

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73% of organizations indicated nearly all their apps will be SaaS by 2021

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

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

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

Negative Churn and Expansion Revenue

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

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