Each year SaaS Capital conducts one of the largest surveys of private, B2B SaaS companies, yielding actionable insights and benchmarking data for SaaS companies.
This research brief examines the quarterly revenue and operating expense data from public SaaS companies to learn how software-as-a-service companies performed through the previous recession. Included is an Excel workbook of the raw data we compiled from SEC filings and used for this analysis.
This research brief provides an overall look at growth rate data from more than 900 private SaaS companies for 2017. The summary data is sorted by company size and age, and also looks at the impact of venture backing, ACV, churn, and vertical market focus on growth rates.
This guide provides a framework for comparing different debt structures and details three specific examples of debt options available to SaaS companies.
This research brief includes both simple benchmarking data to compare your company to your peers, as well as a deeper look into determining pricing’s potential impact on overall company performance.
This research brief shows how revenue growth rates are impacted by ACV, explores differences in growth rates across ACV within a group of similarly sized businesses, and provides key takeaways for managers and investors.
Using debt to fund a SaaS company is widely accepted and there is now a vibrant market of lenders. However, each lender has their own specific criteria, use cases, and non-trivial nuances in structure which makes it difficult to know which one is best for your company. This guide describes the primary debt offerings in the market to help guide your decision-making process.
How SaaS companies spend their money varies based on their specific product, size, and market. However, a detailed analysis from our survey of over 700 private SaaS businesses reveals noteworthy patterns among top-performing businesses that all SaaS company leaders should be cognizant of.
Consistently retaining customers is an important characteristic of any successful SaaS business, and an entire industry, Customer Success, has sprouted up to help SaaS executives do just that. However, knowing what is a “good” retention rate for your individual SaaS company remains difficult to pin down.
An Analysis of Margins, Sales and Marketing Spending, and the Rule of 40% - Generally speaking, while all B2B SaaS companies share a distribution and revenue model, nuances abound in how companies arrange themselves at different points in the lifecycle of the company, and on other important variables like ACV and growth rate. This research brief analyzes SaaS company spending across these variables and can serve as a good benchmark to your own company’s structure.
How to Value a SaaS Company is written for entrepreneurs, angel investors, and the management teams of SaaS businesses. The intent of the paper is to describe the approach used by most professional investors and strategic buyers to value a SaaS company. By better understanding the concepts and mechanics of valuing a SaaS business, management will be better able to articulate and maximize the value of their company, and also have a clear and more accurate estimate of the likely outcome of a sale process or equity raise.
In this research brief, we explore how private SaaS companies contract with their customers (month-to-month, annual, multi-year and on a usage-basis). We reviewed the distribution in contracting by company size and annual contract value (ACV) and analyzed the impact different contracting methodologies have on growth rate and retention rate. One surprising takeaway is that month-to-month contracting is more compelling as a potential driver of revenue growth than any downside impact it might have on customer churn.
More than any other variable, SaaS company valuations are driven by revenue growth. In this Research Brief, we outline the major takeaways we believe will be helpful to companies looking to benchmark their revenue growth based on company size, retention rates, and funding type.
Net churn is the most fundamental metric impacting monthly recurring revenue (MRR) for SaaS companies. This Research Brief examines retention rate compared to the average selling price of products, the age of the company, and the average contract length. It also explores net retention rates, the impact of customer success, the value created by improving retention, and targets for retention.
In this research brief, we analyze the relative expense structure of private SaaS companies. This data can serve as a baseline for similarly-sized businesses. Your company’s spend level should not necessarily track to the chart, but deviations should be understood, and in most cases, be intentional. If your business is operating in a significantly different way, you should try to understand why. That inquiry might lead to identifying inefficiencies, or possible areas of underinvestment.
Our white paper provides private company churn benchmarks, and also specifically quantifies the impact of customer churn on a SaaS company’s valuation. This white paper empirically demonstrates that revenue retention rates directly impact a SaaS company’s valuation in a significant way, and to a much larger extent than typically recognized. The impact is dramatic because retention impacts monthly recurring revenue (MRR), growth rates, contribution margin, and total addressable market (TAM). Plus, it has a compounding effect over time.
If you run a SaaS company, “How fast are you growing?” is usually one of the first questions people ask. Generally speaking, it’s a pretty good question. Revenue growth directly impacts valuation, the ability to attract capital and employees, and is the best single metric for measuring success. Our private SaaS company data measuring revenue growth rates over time.
In theory, if the cost of capital was zero, SaaS businesses would optimize their value by investing as much as possible in sales and marketing right up to the point where their Customer Acquisition Cost (CAC) equals the Lifetime Value (LTV) of a customer. Our research provides insight into how SaaS businesses are deploying their capital.
It’s commonplace for SaaS companies to offer incentive discounts to customers willing to pre-pay for services one year in advance. Our data revealed 52% percent of private SaaS companies offered discounts to encourage up-front payments. The average discount they reported offering to their customers was 11.5%. In practice, however, the cost of that capital is much more expensive than 11.5% in two critical ways.