Love ❤️ SaaS benchmarks? Here are 15 datasets you can use right away

If I had to summarize SaaStr in one word, what would it be?

Benchmarks!!!

In this era of repentance efficiency SaaS operators are expected to obsess over metrics. But which ones matter the most? Here’s my top 5, based on the number of mentions at this year’s SaaStr:

• ARR growth

• ARR / FTE

• Rule of 40

• Net revenue retention

• Magic number (net new revenue added / sales & marketing expense)

You won’t be surprised to hear that these metrics exhibit the highest correlation with company valuation. To quote from a recent ICONIQ report:

Aim for the top quartile on all 5, sprinkle some AI and Product Led Growth (PLG) gold dust over the equity story – and off you go! The obsession with PLG was palpable, bordering on ridiculous (credit to McKinsey, via Okta):

Except…it doesn’t stop there. Judging by the mind-boggling detail of the datasets presented at the conference, investors will want to see how you track across dozens of other metrics, such as sales team segmentation, ratio of AEs per line manager etc.

Here’s a silver lining though. Benchmarking has never been easier – thanks to extensive data mining efforts of VC firms. I’ll sidestep the discussion about what’s relevant for rollups vs. “organic” businesses. At the end of the day, as a rollup founder or operator, feel free to pick the ones you want. I’m only here to share what matters to the people that write big checks. 

The article is structured in 5 parts:

• Definitions

• Operational benchmarks

• Private market valuations: M&A

• Private market valuations: fundraising

• Public market valuations

Let’s start with a glossary

As Dave Kellogg said, misuse and abuse of SaaS metrics often stem from confusion over definitions and calculation of metrics (link to the article). To get your team on same page, I highly recommend these resources:

• ICONIQ’s SaaS Glossary

• Cheat sheets produced by ChartMogul

Operational benchmarks

• Sticking with ICONIQ for a minute, whose “Enterprise Five” analysis tracks median and top quartile ARR growth; NRR; Rule of 40; Magic Number; and ARR/FTE by ARR range. As part of the Go-to-Market Series they publish extensive datasets of Sales, Marketing, and Customer Success benchmarks (including compensation!), again broken down into ARR ranges.

• SaaS Capital publishes an annual survey of 1,500+ privately held B2B SaaS companies examining growth rate, retention, ACVs etc. Interestingly they compared bootstrapped vs. VC backed businesses. Check out the 2023 edition here. 

• With some reservation, I include the OpenView SaaS Benchmarks Report (link to the 2022 edition). Why with reservation? I found it to be quite generic – lots of macro commentary, reliance on surveys etc. In other words, more talking points for a tech investment banker. That said, once this year’s survey results are published it will be interesting to see to what extent the sentiment has shifted.

• Next up, Sapphire Ventures. Check out their generic SaaS startup model, downloadable in spreadsheet format. My personal favourite is anything by Karan Singh who leads Sapphire’s Revenue Excellence team. Karan blew me away with a seriously technical presentation at SaaStr, which was based on this article. I include a screenshot to illustrate the point. 

1. Benchmarkit (fka RevOps Squared) is a treasure trove of data, including:

• Usage-based pricing benchmarks

• Pipeline performance benchmarks

• Financial reporting process benchmarks

…and so on.

• An honourable mention goes to ChartMogul, one of the few European firms listed in this article. ChartMogul has been ramping up its thought leadership, exemplified by the SaaS Benchmarks Report, already on its second edition. Peak inside for data on growth, retention and churn! 

• Finally, if you tire of parsing data sets, have fun with a16z’s Guide to Growth Metrics. Punch in key facts about your firm, and see how you stack up against the peers. 

Private market valuations: fundraising

Christoph Janz from Point Nine, a Berlin based seed stage venture firm, first published the “SaaS Funding Napkin” in 2016. It is a handy snapshot of what it takes to raise equity at different stages: pre-seed, seed, Series A, Series B. Christoph looks at:

• ARR – absolute and growth

• Round size

• Pre-money valuation

• Investor expectations regarding team, sales & marketing, capital efficiency etc. 

You can check out the 2022 edition here. The 2023 version is still being compiled (and will likely be posted here in a couple of weeks’ time). In the meantime, below I shared the preview that Christoph presented at SaaStr.

Carta’s blog is a treasure chest of fundraising insights from pre-seed onwards. Round size, valuations, deal structures etc. Note: as the sample is heavily skewed towards US companies, European readers may want to cross-check Carta’s analysis against Point Nine’s.

Private market valuations: M&A

• Software Equity Group produces monthly, quarterly and annual updates on the M&A activity in the SaaS space. Bookmark their Research page. 

• Aventis Advisors, an M&A broker, maintains a decent dataset of SaaS transaction multiples going back to 2015. Whilst I don’t think the absolute figures are that informative from a rollup’s point view (due to the number of lossmaking businesses included in the analysis), this is M&A data after all.

• Finally, I like to glance over publications by other brokers including Carlsquare (August 2023 report) and FE International (Market Reports section). 

Public market valuations

• Meritech Capital has a detailed, real-time comparables set that also lists revenue growth, all imaginable of margins and ratios for listed US cloud companies. As small as Expensify (<$400M market cap) and as big as Salesforce or Adobe ($200B+ market cap)

• A stripped down version of the Meritech analysis can be found on the Bessemer Venture Partners’ website, under the BVP Cloud Index section. Their aggregate data (BVP index performance, blended revenue multiple etc.) is widely used to gauge the overall state of the SaaS market

• The SaaS Capital Index is equally popular and tracks share price performance as well as revenue and profit multiple evolution. It’s downloadable and goes back to 2008!