Iconiq Growth has released a very good benchmark report for enterprise SaaS companies. It is especially useful to understand the international benchmarks when building a SaaS company in the Nordics (where we overall tend to be a little less aggressive in driving ARR growth and have an emphasis on profitability earlier).
A takeaway that stood out to me was that top quartile SaaS companies grow from $10 million ARR to $100 million ARR in 3.5 years. According to Chartbeat top quartile companies get to $10 million in ARR in 3 years and 8 months from first sale, which makes it about of 7 years and 1 quarter from first sale to $100 million to be in top quartile.
Iconiq also shares benchmark data on popular core SaaS metrics. Even if these metrics are for median and top quartile companies (and not top 10 %), it is clear that raising multiple, ever larger rounds of venture capital with less than top quartile metrics is going to be very dilutive for founders.
The median and top quartile SaaS companies covered are not profitable even at $50-100 million ARR, with average negative free cash flow margins of 35-45 %. So they need to raise a lot of capital.
My take is that either a SaaS startup needs to in the top quartile for ARR growth (with other metrics being roughly equal to competitors) or it should execute a much lower burn plan that can attract a wider variety of investors.
