Helping to raise Series A investment for tech companies.
The most important metric we track in the survey is revenue growth. This is because your company’s growth rate relative to that of other SaaS businesses of similar size is the single largest determinant of your company’s valuation multiple.
BENCHMARKING PRIVATE SAAS COMPANY GROWTH RATES
It's not difficult to benchmark your SaaS business's performance against that of public SaaS companies, but it's also not that
helpful. The sheer scale of the public companies makes for an apples-to-oranges comparison that does not reveal credible
performance accomplishments or gaps. To solve for this information gap, SaaS Capital has been surveying private SaaS
businesses since 2012, and our most recent survey, covering 2017 performance, had over 950 company participants. The
survey covers a wide range of topics including churn, CAC, unit economics, spending levels, etc., and we will report on all
those metrics throughout the year.
The most important metric we track in the survey is revenue growth. This is because your company's growth rate relative to that of
other SaaS businesses of similar size is the single largest determinant of your company's valuation multiple.
Growth Rate by Company Size
How fast your SaaS business is growing is only relevant when
compared to a group of similarly sized businesses. A growth rate
of 80% for a $3 million SaaS business is very good, while growth
of 80% for a $20 million SaaS business is amazing. The smaller
company might be worth 5 times revenue, while the latter might
be worth closer to 10 times revenue.
A few takeaways from the data:
First and foremost: overall growth in the SaaS industry
is pervasive. Out of the nearly 950 respondents, only
four companies reported shrinking in 2017, and only 41
companies reported zero growth. Of the remaining ~900
companies, 90% reported annual revenue growth of
greater than 10%.
Second, growth rates decline as revenue levels increase.
This is simply due to math (a larger denominator) and
boards and management teams need to use the data
above to set infor