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2020 Growth Benchmarks for Private SaaS Companies

August 27, 2020

In the first quarter of each year, SaaS Capital conducts a survey of B2B SaaS company metrics. This year’s study marked our 9th annual survey, with over 1,400 private B2B SaaS companies responding. Below is a summary of our findings on private SaaS company growth rates* which were published earlier this month. (You can join the SaaS Capital community here and receive new research as soon as it is published.)

The most important metric we track is revenue growth.  As explained in our framework for valuing SaaS companies, growth rate is the single most significant determinant of your company’s valuation multiple.

And while it’s not difficult to benchmark your SaaS company’s performance against that of public SaaS companies, it’s also only slightly useful. The sheer scale of public companies makes for an apples-to-oranges comparison to smaller, private companies.

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 below average, while growth of 80% for a $20 million SaaS business is twice the average. The smaller company might be worth 5 times revenue, while the latter might be worth closer to 10 times revenue. The chart below shows average and median growth from the survey data broken down by Annual Recurring Revenue (ARR).

2020 Growth Rate Benchmarks for Private SaaS Companies

Overall, growth in the SaaS industry in 2019 was pervasive. Only 2% of the companies in the survey reported shrinking revenue year-over-year, and 87% reported annual revenue growth of greater than 10%. The most obvious takeaway is that growth rates decline as revenue levels increase. This is simply due to math: as the denominator increases, it becomes increasingly hard to maintain the same percentage change.

It is not enough for new bookings to remain constant; new bookings must grow year-over-year to maintain the same growth rate. This phenomenon is most pronounced in the difference between the average and median values of smaller companies.

Boards and management teams need to use the data above to set informed growth plans and not simply base assumptions on prior-year performance.

The table shows more detailed growth rate percentiles for the same ARR groupings.

Growth Rate by ARR  10th Percentile   25th Percentile   50th Percentile   75th Percentile   90th Percentile 
Less than $1 Million 14% 30% 68% 120% 242%
Less than $1 Million 10% 24% 45% 91% 252%
$3 - $5 Million 4% 20% 35% 69% 160%
$5 - $10 Million 10% 20% 40% 65% 100%
$10 - $20 Million 8% 15% 33% 56% 99%
More than $20 Million 6% 18% 35% 53% 90%


Here we get a better understanding of the range that exists at each revenue stage:

  • A $2 million SaaS company needs to be growing at more than 90% year-over-year to be in the top 25% of its peers.
  • A $10 million SaaS company needs to be growing by more than 55% to be in the top quartile.
  • Companies up to $10 million in ARR need to be growing by at least 20% annually to avoid being in the bottom quartile.

Other Findings

The full Research Brief offers additional commentary on the data above as well as breakdowns on growth rate by funding type, growth rate and retention, and growth rate by company age. Key takeaways include:

  • Overall, bootstrapped companies report growing at 28% per year, whereas companies that have raised venture capital financing were growing at 55% annually. The median growth rate for VC-backed companies with between $1 in ARR and $20 million in ARR is double that of similarly sized bootstrapped companies.
  • Higher growth is generally associated with higher retention and vice versa. Companies with retention between 100% to 110% reported median growth of 40%. Companies with lower retention reported median growth of 30%, while companies with retention above 110% reported median growth of 60%.
  • Company age and growth rates are inversely correlated up until about 12 years of age. For companies 13 years old and older, the growth rate stabilizes at about 20%. The median age for bootstrapped companies was 10 years old, while the median age for VC-backed companies was 6 years old.
  • It takes approximately 5 years for companies to reach $1 million in ARR. Venture capital-backed companies reach the milestone in 4 years, while bootstrapped companies get there in 7.5 years.
To download the full analysis, please see – 2020 Private SaaS Company Growth Rate Benchmarks.

*It needs to be explicitly stated that this data was collected in early 2020 and is based on 2019 performance metrics, before the impact of the COVID-19 pandemic. Additional commentary and anecdotal data gathered since the pandemic began can be found in 2020 Private SaaS Company Growth Rate Benchmarks.

Nick Perry

SaaS Capital® pioneered alternative lending to SaaS. Since 2007 we have spoken to thousands of companies, reviewed hundreds of financials, and funded 80+ companies. We can make quick decisions. The typical time from first “hello” to funding is just 5 weeks. Learn more about our philosophy.

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