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In other words, the typical round size for SaaS companies hasn’t changed materially over the past 16 years but the number of rounds has doubled, which has doubled the amount of capital a startup raises in aggregate before IPO. At least on the surface, the data indicates SaaS companies aren’t more efficient.

That pattern may be driven by an increasingly friendly financing environment or because of increased capital needs of the business or many other reasons. So the next question to answer is capital efficiency. In a future analysis, I’ll calculate the ratio of revenue dollars to VC dollars invested to get a sense of the reality of cloud capital efficiency per revenue dollar.

Tomasz Tonguz

More SaaS + Software Stats

Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues

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

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

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

How to Reduce Churn

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

After $10M in ARR, the median growth rate slows to just under 50%

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

SaaS IPOs have more than doubled over the last 12 years

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

More Growth Strategy Stats

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

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

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

Google only has a 30 percent female workforce

How To Make Pricing A Constant Process In Your Organization

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

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

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer