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In the first 3 years, these public SaaS companies spend between 80 to 120% of their revenue in sales and marketing (using venture dollars or other forms of capital to finance the business). By year 5, that ratio has fallen to about 50% where it remains for the life of the business.

Despite the divergent revenue ramps, the marketing and sales spend patterns for these companies resemble each other strongly and serve as good benchmarks for high-growth SaaS startups.

In case you’re curious, below is the “typical” revenue growth trajectory for these SaaS companies: $50M in year five, $100M in year ten.

Tomasz Tonguz

More SaaS + Software Stats

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

56% treat “Existing Customer Renewals” as high priority

The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

55% of SaaS companies rate Customer Retention as the key metric to measure

More Growth Strategy Stats

Negative Churn and Expansion Revenue

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

At Twitter, 10 percent of tech roles are staffed by women

In 2018, the market size of information technology outsourcing amounted to 62 billion U.S. dollars.

56% treat “Existing Customer Renewals” as high priority

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

In 2017, the world invested around 3.4 billion U.S. dollars in small hydropower technologies, down from 3.9 billion U.S. dollars in 2016.

The boom in the industry is creating more jobs for techies. Data reveals there were 627,000 unfilled positions in tech in April 2017

Internet Sales strategies have a significantly lower CAC of just $0.42