Category: SaaS
June 20, 2024 SaaS Capital : What’s Your SaaS Company Worth?
Valuation Multiple = -2.43 + (0.19 * SCI) + (6.21 * ARR Growth Rate) + (4.38 * NRR Rate) (read more…)
May 22, 2024 Emergence Capital : Beyond Benchmarks 2024
ARR growth rates decreased significantly in 2023, and growth stage companies were impacted the most. Fundraising is meaningfully harder today than it has been in the past few years. 60% of companies leveraged GenAI in a 2023 product release. Public Markets no longer reward "Growth at All Costs"; however, Public Markets still value Growth at 2-3x Profitability (read more…)
April 26, 2024 SaaS Capital : 2024 Benchmarking Metrics for Bootstrapped SaaS Companies
The median growth rate for bootstrapped SaaS companies with $3M to $20M in ARR is 30% while those in the 90th percentile are growing by 75%. The median Net Revenue Retention (NRR) for bootstrapped SaaS companies with $3M to $20M in ARR is 100% while those in the 90th percentile report NRR of 120%. (read more…)
April 11, 2024 SaaS Capital : 2024 Private SaaS Company Valuations
As of March 31, 2024, the SCI median valuation multiple stands at 6.8 times current run-rate annualized revenue (we believe run-rate revenue is the most accurate measure of the current scale of the business). While the multiple has stabilized in the 6-7x range, it is down roughly 60% from its peak achieved in 2021. (read more…)
April 1, 2024 SaaStr : The Most Important SaaS Metric of All: Net New Customer Growth
The leaders in SaaS and Cloud keep new customer count up in the double-digits … even at billions in ARR. The averages: + 14% new customer count growth + 23% ARR growth even at + 1.25B ARR on average But that’s the average. You want to do better than that, given that the average public SaaS company only trades at 6x ARR. So aim for 20%+ new customer growth at scale ($100m+), and 50%+ as you approach $50m ARR. Below that is just too low. Your present may be secure, but your future is at high risk. And try to keep your customer count growing at least 50% as fast as your NRR, higher if you are SMB. That ensures you have a future, and you aren’t overly reliant on upsells from the base. (read more…)
March 19, 2024 SaaStr : What Are The Odds You Get Acquired Within 5 Years for a Good Price? Around 1%-1.5%
So my educated guess from this data: 1%-1.5% of startups have a “good” exit in the first 5 years. That sounds pretty tough, and I guess it is. But it also means just plan on going longer. A number of my best “exits” had no great M&A offer the first 5 years, and a number of others had soft offers that fell apart in the end. Go long. If something great comes up first, maybe take it. And be optimistic, too. But realize it may be years 6-10+ where you build the real value. 5 is fast in SaaS and B2B. (read more…)
CATEGORY: resilience, SaaS
March 14, 2024 SaaS Capital : The Rule of 40 is Dead… Long Live the Rule!
For companies at least 2 years away from an exit transaction, grow as sustainably fast as your expected access to capital will allow you in your chosen market, and burn as much cash as you can access. For companies with an exit horizon within 2 years, get to breakeven to own your destiny. (read more…)
CATEGORY: growth, resilience, SaaS
December 1, 2023 Meritech Capital : Public SaaS Comparables Table
- 93% of companies have YoY Implied ARR growth <40%
- 74% of companies have FCF margin <20%
- 26% of companies are achieving Rule of 40
- 39% of companies have returned <1x since IPO
CATEGORY: profitability, SaaS, valuation
November 16, 2023 SaaS Capital : What is the Average Deal Size for Private SaaS Companies in 2023?
Deal size is correlated with company size. For example, companies with ARR $1 – $3 Million in ARR show a median ACV of $16,197 while companies with ARR of $10 – $20 Million show a median ACV of $35,831. For all but one company size (those with ARR $5 – $10 Million) ACVs generally declined vs. 2021. (read more…)
CATEGORY: growth, resilience, SaaS
November 8, 2023 Open View Partners : 2023 SaaS Benchmarks Report
- While growth is much harder to come by in 2023, there are pockets of resilience amid the doom-and-gloom.
- The North Star for many has become ARR per FTE, which reflects the productivity of your team. We’ve seen big increases in ARR per FTE year-on-year.
- Positioning yourself as “AI” doesn’t impact growth. But monetizing AI does.
- To drive productivity, companies need efficient product-led growth (PLG), expansion within the customer base, and improved operations.
CATEGORY: leadership, profitability, resilience, SaaS