Benchmarking SaaS Companies

Venture Capitalist at Redpoint à Looker
23 Oct 2014
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
Benchmarking SaaS Companies
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Benchmarking SaaS Companies

Notes de l'éditeur

  1. Let me give you a little bit of background on red point. We invest in every part of technology stack, from consumer applications like secret to enterprise software like zuora and mapr, to developer services like stripe and twilio, and infrastructure companies like pure storage We have 11 partners and most of them are based in California. We have a team in China that is invested in some of the largest companies there. And we have a team in the fund in Brazil who cover South America for us. We also have the notable distinction of being the only venture capital firm in the world with two former ATMs on staff, Jamie Davidson (YouTube and I)
  2. Blog extensively at tomtunguz.com Data driven analysis
  3. Let’s first set some context about the environment It’s a bull market
  4. B of USD entering the venture market black line is the post dot com median 2014 will be the fourth largest in 14 years
  5. In terms of dollars deployed, invested into companies, 2014 is on track to exceed $40B, making it the second largest year since the dot com era
  6. This dollars have been raised by many new firms, particularly institutional seed stage
  7. All that capital is increasing the amount of capital deployed per investment in the US. Median across A, B, C.
  8. Meanwhile in the publlic markets, there’s a bit of a different story. NTM revenue to market 2.2B market cap - 3x in 2004 and 6X in 2005
  9. Split it by high growth WorkDay, Splunk, ZenDesk, DemandWare, LinkedIn tale of two markets relative stability of the standard markets, much greater variance in the high growth companies, still trading at 12x, which is similar to private market multiples, particularly in the growth stage.
  10. Median publicly traded SaaS company achieves $11M by third year, reaching about $64M in year six, the year before IPO. After that, growth tends to slow.
  11. Looking at the data at a bit more granular level. Each point represents a year for a SaaS company. At the beginning, SaaS companies are growing close to 200% per year, and that number begins to taper reaching about 100% by year five and then 50% by year seven.
  12. Let’s break this out by segment: SMB is < $10k acv; mid market is < $100k ACV; http://tomtunguz.com/segmenting-saas-growth/
  13. http://tomtunguz.com/fundraising-history-saas-publics/ Median is 70M The number of rounds of financing each company raises before IPO has nearly doubled from 2.5 to 4.5, i.e. Series B/C to Series D/E. These figures exclude seeds, which I’ve defined as rounds less than $1.5M.
  14. Inflation adjusted in 2014 dollars $32M on the balance sheet at IPO time, spent $69 during the seven years
  15. This is list of publicly traded saaS companies by acv at time of IPO Huge range Median is $30k
  16. Amazingly, sales efficiency isn't actually tied to ACV. These are the top five most efficient sales organizations. Huge variance in sales efficiency
  17. Here’s the data broken down by segment and shown over time. Monotonically decreasing No statistically significant difference among the companies Early on, sales efficiency should be close to one and then ideally plateau to 0.8, which is the median The median SaaS company selling a $1M product declines from a sales efficiency of 1.7 to 0.9 in about 6 years, a 47% drop. In contrast, the $50k ACV median falls 9%.
  18. Quotas What sizes of quotas do we typically see Function of acv and deal velocity; we’ll get into that in a second