Understanding Monthly Growth Rates for SaaS Companies in 2015

In the rapidly evolving landscape of SaaS (Software as a Service) companies, understanding the monthly growth rates in terms of revenue, sign-ups, and user activity is crucial for growth and success. In 2015, these growth rates varied significantly based on the stage of the company and the specific metrics being measured. This comprehensive guide provides insights into what was considered attractive growth rates for different segments of SaaS companies during that period.

Revenue Growth

When it comes to revenue growth, the performance of SaaS companies depended heavily on the stage of the company. For early-stage SaaS firms, achieving a consistent 15 to 25 percent month-over-month (MoM) growth was often seen as a sign of strong market demand and effective sales and marketing strategies. Conversely, mature SaaS companies that had already established a presence in the market could find a more sustainable 5 to 10 percent MoM growth rate to be healthy.

Early-Stage SaaS Companies

Achieving a revenue growth of 15 to 25 percent MoM indicated strong performance and market demand. Signs of effective sales and marketing strategies were prevalent in companies achieving this growth rate.

Mature SaaS Companies

A 5 to 10 percent MoM growth was considered healthy and sustainable. This level of growth signified stability and effective operational efficiency.

New Sign-Ups

The number of new sign-ups was another critical metric for SaaS companies, and its growth rate also varied based on the company's stage.

Early-Stage SaaS Companies

A growth rate of 20 to 40 percent MoM for new sign-ups was seen as very promising. This growth rate indicated that the company was efficiently acquiring new customers.

Mature SaaS Companies

A 10 to 20 percent MoM growth rate for new sign-ups was generally acceptable. However, this rate became less attractive as the user base expanded and market saturation increased.

User Activity Engagement

User activity engagement is a crucial metric that reflects the success of a product and its fit within the market. The growth rate in user engagement metrics also depended on the stage of the company.

Early-Stage SaaS Companies

Growth rates of 15 to 30 percent MoM in active users or engagement metrics were considered attractive. This indicated strong product-market fit and potential for future growth.

Mature SaaS Companies

A growth rate of 5 to 15 percent MoM in user engagement was often seen as positive. Especially if the user base was large and established, this level of growth signaled continued stability and user satisfaction.

Additional Considerations

Several factors influenced the attractiveness of these growth rates, including market conditions, competition, and the specific niche within the SaaS sector. Additionally, the impact of seasonality and the product life cycle stage were also significant considerations.

Market Conditions

Market conditions varied significantly from year to year, which could affect the benchmarks for growth. Companies needed to be adaptable to changes in the market environment.

Seasonality and Product Life Cycle

Seasonal fluctuations could impact growth rates, and companies had to consider these factors when evaluating their performance. The specific life cycle stage of the product could also influence growth expectations.

Additional Insights for Late-Seed and Series A/B Funding Stages

The benchmarks for growth rates became even more nuanced as companies progressed through different funding stages. Late-seed stage companies, in particular, required a specific growth rate to maintain investor interest.

Late-Seed Stage Companies

For late-seed companies, a 15 percent MoM growth rate was considered attractive. However, for smaller companies, these numbers may be meaningless and impractical.

Series A Funding

For Series A companies, growing at least 50 percent quarterly was highly attractive. This rate indicated the potential to achieve substantial growth within a short period. Investors were looking for companies that could scale from 1 million to 10 million customers in five quarters or less.

Series B Funding

For Series B companies, an annual growth rate of 150 percent was highly attractive. Alternatively, seeing that a company could scale from 10 million to 20 million customers in less than 12 months thereafter was also seen as attractive.

Overall, while these benchmarks provide a general idea, individual company performance can vary widely based on numerous factors, including the overall market environment and the effectiveness of their growth strategies. Understanding and adapting to these growth benchmarks is key for SaaS companies looking to achieve success in the competitive landscape of 2015 and beyond.