FINANCIAL &
OPERATING
BENCHMARKS
View the interactive report here.
Sean Fanning & Kyle Poyar
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T A B L E O F C O N T E N T S
Introduction
I
Participant Overview
II
Executive Summary
III
Financial &
Operating Insights
IV
Product-Led
Growth Insights
V
Go-to-Market Insights
VI
Cash Flow Insights
VII
Talent Insights
VIII
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I. Introduction
Objective data is critical to making the right strategic
decisions that can propel your long-term growth. For
this reason, we’re releasing the results of our fifth
annual Financial & Operating Benchmarks survey
(formerly known as the SaaS Benchmarks Survey). This
report was designed specifically to enable operators
to compare themselves against their exact peers
across the metrics that matter most in a SaaS business.
This year’s survey was live from May to September.
The 2021 report incorporates data from more than
2,400 respondents aggregated across prior surveys
as well as almost 600 this year alone.
Our data revealed surprising insights about the cash
flow dynamics in SaaS companies, what investors are
rewarding in company performance, the prevalence
of product-led growth, how to position for success in
a fundraise as well as fundraising trends.
We’ve also covered many of our usual favorite topics
ranging from the key SaaS value drivers, pricing
models, progress on executive diversity and much
more. This document details the “nitty gritty” results of
our benchmarks survey to provide insight into ranges
of performance across various metrics.
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THANKS TO OUR
SPONSORS & PARTNERS
PARTICIPANT
OVERVIEW
II.
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<$1M
$2.5M-10M
$1-2.5M
$10-20M
$20-50M
>$50M
23%
25%
18%
13%
14%
7%
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
US
Europe
Canada
APAC
Other
54%
12%
7%
19%
8%
B y A R R
B y
G e o g r a p h y
D i s t r i b u t i o n
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Source: 2021 OpenView Financial & Operating Metrics
Survey, N=225.
D i s t r i b u t i o n
B y
r e s p o nde n t
r o l e
B y
t a r g e t
c u s t o m e r
s i z e
Enterprise
(>1,000 employees)
Midmarket
(101-1,000 employees)
SMB
(20-100 employees)
Very small business
(VSB, <20 employees)
Consumer
36%
7%
2%
34%
21%
CEO / Founder / Co-Founder
CFO / VP of Finance
COO / VP of Operations
Other
CRO / VP of Sales
CMO / VP of Marketing
50%
7%
4%
30%
6%
3%
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EXECUTIVE
SUMMARY
III.
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HOW TO USE THESE
BENCHMARKS
We often get asked:
“How do I use these benchmarks, isn’t faster and
cheaper always better?” Our answer: it depends.
The focus should be on the qualitative: stage of business, state of
the market, customer base, and what is right for the business'
stakeholders (employees, customers, etc.) and its shareholders.
Operationalizing benchmarks is part science, part art – not just
where is everyone else, but also: “what makes sense for me?”
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Here are 4 tips we offer for using benchmarks:
Benchmarks are the map,
not the territory:
Use financial & operating benchmarks
only as a map for “acceptable ranges,”
at any point in time that will eventually
enable your business to generate
repeatable and predictable free cash
flow in the future.
Performance and valuation are
a multivariate equation:
Growth is a function of investment in
sales and product which is a function of
growth… and so on…
Sound strategy involves tradeoffs:
See above. Sometimes sacrificing
efficiency for growth is necessary to win
the short term or unlock the next round
of financing.
Let shareholders’ risk / return
expectation act as a guide:
Different investors have different tastes
for risk and return; know what your
“dream investor” looks like so you can
optimize performance vs. benchmarks
that align with their “taste.”
1
2
3
4
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Company performance benchmarks
S I Z E A N D G R O W T H
Employees
Number of full-time equivalent employees at the end of Q1 2021.
Funding
Amount of equity capital raised to date.
Annual Recur r ing Revenue (ARR)
Company annual recurring revenue (ARR) scale at the end of Q1 2021.
YoY Growth Rate
Change in annual recurring revenue at the end of Q1 2021 vs. Q1 2020.
F I N A N C I A L
Sales & Market ing Spend
Spending on Sales & Marketing, including headcount, as a % of ending ARR as of Q1 2021.
R&D Spend
Spending on R&D, including headcount, as a % of ending ARR as of Q1 2021.
Gross Marg ins
Subscription revenue less cost of goods sold divided by subscription revenue at the end of Q1 2021.
Month ly Burn Rate ( in 000’s )
Net monthly operating cash burn rate at the end of Q1 2021 (total $ lost each month, negative values = profit).
S A A S V A L U E D R I V E R S
CAC Payback (months )
Months of subscription gross margin to recover the fully loaded cost of acquiring a customer.
Gross Dol lar Reten t ion
Annual gross dollar retention (after churn, exclusive of upsells & expansion) seen in cohorts.
Net Dol lar Reten t ion
Annual net dollar retention (after churn, inclusive of upsells & expansion) seen in cohorts.
D I V E R S I T Y
Women in Leadersh ip
% of female representation among employees Director-level and above.
Underrepresented Minor i t ies in Leadersh ip
% of underrepresented minority representation among employees Director-level and above.
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<$1M
$1-2.5M
$2.5M-10M
$10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
18 (5-18)
38 (18-38)
76 (38-76)
151 (76-151)
151 (151-351)
351 (351-463)
YoY Growth Rate
100% (26-300%) 90% (45-300%) 50% (30-100%)
50% (20-75%)
33% (25-49%)
30% (10-56%)
F I N A N C I A L
Sales & Market ing Spend
25% (6-50%)
30% (13-40%)
32% (20-49%)
34% (15-44%)
35% (25-44%)
50% (19-61%)
R&D Spend
50% (30-80%)
40% (30-65%)
34% (25-55%)
39% (20-50%)
25% (20-45%)
30% (22-39%)
Gross Marg ins
67% (24-83%)
75% (58-84%)
76% (68-83%)
75% (62-85%)
80% (75-83%)
79% (70-87%)
Month ly Burn Rate ($ in 000s )
$50 (50-175)
$50 (0-375)
$375 (50-500)
$375 (144-875)
$375 (0-1250)
$25 (0-1625)
S A A S V A L U E D R I V E R S
CAC Payback (months )
8 (2-11)
8 (5-15)
15 (8-15)
15 (11-15)
18 (12-21)
15 (10-17)
Gross Dol lar Reten t ion
98% (90-100%) 96% (90-100%)
95% (82-98%)
84% (73-92%)
90% (85-95%)
85% (64-90%)
Net Dol lar Reten t ion
100% (93-110%) 100% (94-110%) 106% (96-120%) 103% (86-113%) 105% (100-110%) 105% (95-120%)
D I V E R S I T Y
Women in Leadersh ip
15% (0-30%)
25% (5-40%)
25% (13-45%)
30% (23-40%)
30% (19-41%)
28% (11-44%)
Underrepresented Minor i t ies in Leadersh ip
0% (0-25%)
0% (0-44%)
0% (0-20%)
2% (0-20%)
5% (0-14%)
9% (5-26%)
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
Rows represent common KPIs across
categories including size and growth,
financial, value drivers, and diversity
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<$1M
$1-2.5M
$2.5M-10M
$10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
18 (5-18)
38 (18-38)
76 (38-76)
151 (76-151)
151 (151-351)
351 (351-463)
YoY Growth Rate
100% (26-300%) 90% (45-300%) 50% (30-100%)
50% (20-75%)
33% (25-49%)
30% (10-56%)
F I N A N C I A L
Sales & Market ing Spend
25% (6-50%)
30% (13-40%)
32% (20-49%)
34% (15-44%)
35% (25-44%)
50% (19-61%)
R&D Spend
50% (30-80%)
40% (30-65%)
34% (25-55%)
39% (20-50%)
25% (20-45%)
30% (22-39%)
Gross Marg ins
67% (24-83%)
75% (58-84%)
76% (68-83%)
75% (62-85%)
80% (75-83%)
79% (70-87%)
Month ly Burn Rate ($ in 000s )
$50 (50-175)
$50 (0-375)
$375 (50-500)
$375 (144-875)
$375 (0-1250)
$25 (0-1625)
S A A S V A L U E D R I V E R S
CAC Payback (months )
8 (2-11)
8 (5-15)
15 (8-15)
15 (11-15)
18 (12-21)
15 (10-17)
Gross Dol lar Reten t ion
98% (90-100%) 96% (90-100%)
95% (82-98%)
84% (73-92%)
90% (85-95%)
85% (64-90%)
Net Dol lar Reten t ion
100% (93-110%) 100% (94-110%) 106% (96-120%) 103% (86-113%) 105% (100-110%) 105% (95-120%)
D I V E R S I T Y
Women in Leadersh ip
15% (0-30%)
25% (5-40%)
25% (13-45%)
30% (23-40%)
30% (19-41%)
28% (11-44%)
Underrepresented Minor i t ies in Leadersh ip
0% (0-25%)
0% (0-44%)
0% (0-20%)
2% (0-20%)
5% (0-14%)
9% (5-26%)
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
Columns represent distribution of
responses from companies at varying
levels of ARR, from <$1M to >$50M
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<$1M
$1-2.5M $2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
18 (5-18)
38 (18-38)
76 (38-76)
151 (76-151)
151 (151-351)
351 (351-463)
YoY Growth Rate
100% (26-300%) 90% (45-300%)
50% (30-100%)
50% (20-75%)
33% (25-49%)
30% (10-56%)
F I N A N C I A L
Sales & Marke t ing Spend
25% (6-50%)
30% (13-40%)
32% (20-49%)
34% (15-44%)
35% (25-44%)
50% (19-61%)
R&D Spend
50% (30-80%)
40% (30-65%)
34% (25-55%)
39% (20-50%)
25% (20-45%)
30% (22-39%)
Gross Marg ins
67% (24-83%)
75% (58-84%)
76% (68-83%)
75% (62-85%)
80% (75-83%)
79% (70-87%)
Month ly Burn Rate ($ in 000s )
$50 (50-175)
$50 (0-375)
$375 (50-500)
$375 (144-875)
$375 (0-1250)
$25 (0-1625)
S A A S V A L U E D R I V E R S
CAC Payback (months )
8 (2-11)
8 (5-15)
15 (8-15)
15 (11-15)
18 (12-21)
15 (10-17)
Gross Do l lar Re ten t ion
98% (90-100%)
96% (90-100%)
95% (82-98%)
84% (73-92%)
90% (85-95%)
85% (64-90%)
Net Do l lar Re ten t ion
100% (93-110%)
100% (94-110%)
106% (96-120%)
103% (86-113%) 105% (100-110%) 105% (95-120%)
D I V E R S I T Y
Women in Leadersh ip
15% (0-30%)
25% (5-40%)
25% (13-45%)
30% (23-40%)
30% (19-41%)
28% (11-44%)
Underrepresented Minor i t ies in Leadersh ip
0% (0-25%)
0% (0-44%)
0% (0-20%)
2% (0-20%)
5% (0-14%)
9% (5-26%)
Each cell represents the median
performance of a company, as well as
the range (bottom quartile – top quartile) of
each metric at each respective ARR scale
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
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Financial & operating metrics by ARR
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
<$1M
$1-2.5M
$2.5M-10M
$10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
18 (5-18)
38 (18-38)
76 (38-76)
151 (76-151)
151 (151-351)
351 (351-463)
YoY Growth Rate
100% (26-300%) 90% (45-300%) 50% (30-100%)
50% (20-75%)
35% (25-49%)
30% (10-56%)
F I N A N C I A L
Sales & Market ing Spend
25% (6-50%)
30% (13-40%)
32% (20-49%)
34% (15-44%)
35% (25-44%)
50% (19-61%)
R&D Spend
50% (30-80%)
40% (30-65%)
34% (25-55%)
39% (20-50%)
25% (20-45%)
30% (22-39%)
Gross Marg ins
67% (24-83%)
75% (58-84%)
76% (68-83%)
75% (62-85%)
80% (75-83%)
79% (70-87%)
Month ly Burn Rate ($ in 000s )
$50 (50-175)
$50 (0-375)
$375 (50-500)
$375 (144-875)
$375 (0-1250)
$25 (0-1625)
S A A S V A L U E D R I V E R S
CAC Payback (months )
8 (2-11)
8 (5-15)
15 (8-15)
15 (11-15)
18 (12-21)
15 (10-17)
Gross Dol lar Reten t ion
98% (90-100%) 96% (90-100%)
95% (82-98%)
84% (73-92%)
90% (85-95%)
85% (64-90%)
Net Dol lar Reten t ion
100% (93-110%) 100% (94-110%) 106% (96-120%) 103% (86-113%) 105% (100-110%) 105% (95-120%)
D I V E R S I T Y
Women in Leadersh ip
15% (0-30%)
25% (5-40%)
25% (13-45%)
30% (23-40%)
30% (19-41%)
28% (11-44%)
Underrepresented Minor i t ies in Leadersh ip
0% (0-25%)
0% (0-44%)
0% (0-20%)
2% (0-20%)
5% (0-14%)
9% (5-26%)
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Financial & operating metrics by ARR ( 2 0 2 1 v s . 2 0 2 0 )
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
<$1M
$1-2.5M
$2.5M-10M
$10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
18 (↑ 8)
38 (↑ 13)
76 (↑ 24)
151 (↑ 58)
151 (↓ 69)
351 (↓ 144)
YoY Growth Rate
100% (0%)
90% (↑ 30%)
50% (↑ 9%)
50% (↑ 4%)
35% (↓ 15%)
30% (↑ 9%)
F I N A N C I A L
Sales & Market ing Spend
25% (↑ 5%)
30% (0%)
32% (↑ 2%)
34% (↓ 1%)
35% (↑ 4%)
50% (↑ 21%)
R&D Spend
50% (↓ 18%)
40% (0%)
34% (↑ 2%)
39% (↑ 11%)
25% (↓ 2%)
30% (↑ 8%)
Gross Marg ins
67% (0%)
75% (0%)
76% (↓ 2%)
75% (↓ 4%)
80% (↑ 1%)
79% (↑ 4%)
Month ly Burn Rate ($ in 000s )
$50 ($0)
$50 ($0)
$375 (↑ $200)
$375 (↑ $200)
$375 ($0)
$25 (↑ $25)
S A A S V A L U E D R I V E R S
CAC Payback (months )
8 (0)
8 (↓ 2)
15 (↑ 4)
15 (↑ 4)
18 (↑ 3)
15 (0)
Gross Dol lar Reten t ion
98% (↑ 8%)
96% (↑ 6%)
95% (↑ 5%)
84% (↓ 3%)
90% (↑ 3%)
85% (↓ 5%)
Net Dol lar Reten t ion
100% (↑ 1%)
100% (0%)
106% (↑ 3%)
103% (↑ 1%)
105% (0%)
105% (0%)
D I V E R S I T Y
Women in Leadersh ip
15% (↑ 5%)
25% (↑ 5%)
25% (0%)
30% (↑ 1%)
30% (↑ 10%)
28% (↑ 13%)
Underrepresented Minor i t ies in Leadersh ip
0% (0%)
0% (0%)
0% (0%)
2% (↑ 2%)
5% (0%)
9% (↓ 4%)
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Financial & operating metrics by most recent funding
Angel / Seed
Series A
Series B
Series C
Series D+
S I Z E A N D G R O W T H
Employees
18 (8-38)
76 (38-151)
151 (76-151)
151 (76-251)
351 (351-351)
Funding
$3M ($0.5-3M)
$15M ($8-15M)
$43M ($28-63M)
$63M ($43-63M)
$88M ($43-100M)
Annual Recur r ing Revenue (ARR)
$2M ($0.5-$2M)
$6M ($2-6M)
$15M ($6-15M)
$15M ($6-35M)
$50M ($35-50M)
YoY Growth Rate
100% (41-304%)
60% (35-193%)
65% (29-121%)
35% (23-47%)
43% (13-50%)
F I N A N C I A L
Sales & Market ing Spend
28% (10-40%)
33% (20-50%)
33% (20-44%)
39% (25-66%)
42% (25-60%)
R&D Spend
40% (25-70%)
40% (26-56%)
30% (18-50%)
38% (26-55%)
35% (20-46%)
Gross Marg ins
70% (49-82%)
78% (68-85%)
78% (70-85%)
80% (73-83%)
78% (68-88%)
Month ly Burn Rate ($ in 000s )
$50 (50-175)
$375 (50-625)
$375 (175-1250)
$375 (175-1,094)
$275 (0-1250)
S A A S V A L U E D R I V E R S
CAC Payback (months )
8 (3-15)
15 (8-21)
15 (11-17)
15 (12-28)
15 (15-21)
Gross Dol lar Reten t ion
97% (91-100%)
93% (81-98%)
90% (80-97%)
88% (82-92%)
85% (77-92%)
Net Dol lar Reten t ion
100% (97-120%)
102% (88-110%)
106% (99-125%)
104% (100-108%)
95% (91-118%)
D I V E R S I T Y
Women in Leadersh ip
20% (0-40%)
25% (9-37%)
30% (20-50%)
28% (20-40%)
19% (10-40%)
Underrepresented Minor i t ies in Leadersh ip
0% (0-50%)
0% (0-20%)
3% (0-20%)
5% (0-14%)
9% (0-20%)
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
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FINANCIAL & OPERATING
INSIGHTS
IV.
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<50%
50 to 70%
70 to 75%
75 to 80%
80 to 85%
85 to 90%
>90%
GROSS MARG IN ON
SUBSCRIPTION REVENUE
Gross margin is a key and often
overlooked lever in any business – 7/10
companies surveyed have gross margins
in excess of 70%. Best-in-class companies
across all ARR scales see gross margins of
at least 80%.
As a reminder, gross margin should
always include hosting, as well as any
services and customer onboarding costs.
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
Gross margin on
subscription
revenue
distribution
16%
15%
13%
13%
19%
14%
11%
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<60%
60 to 70%
70 to 80%
80 to 90%
>90%
GROSS DOLL AR
RETENTION RATES
Gross dollar
retention rates
(annual)
Top tier gross retention rates are
consistently ~85-90%+ regardless of last
round or ARR scale.
Similarly, these rates are consistent
regardless of bull or bear market
conditions. This year we saw a reduction
in the percentage of respondents in the
lower GDR tiers (besides 60-70%, which
remained flat) and a 10% increase in
companies reporting GDR >90%.
Outstanding gross dollar retention
remains “table stakes” in enterprise SaaS.
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
8%
5%
4%
20%
63%
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<85%
85 to 95%
95 to 100%
100 to 105%
105 to 115%
115 to 125%
125 to 135%
>135%
Net dollar retention remains a “fan
favorite” vanity metric for companies and
investors alike. As we saw with GDR, net
dollar retention rates have improved
since 2020. Nearly half of companies
surveyed reported NDR over 105% and 3
in 20 reported NDR over 125%.
Net dollar retention tells the whole story
about what is happening within your
customer base. While there are many
ways to calculate this, we believe all
retention figures should be tracked at the
cohort level to most appropriately
visualize trends over time.
Net dollar
retention
rates
(annual)
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
13%
10%
13%
18%
21%
11%
7%
7%
NET DOLL AR
RETENTION RATES
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Gross & net retention by ARR
Gross retention rates start off high, as
companies initially refine product-market
fit, working directly with customers in one
target segment of the market to
understand what needs are.
As companies reach the $10-20M
threshold they’ve achieved product-
market fit and address customer needs in
the total market. It becomes more
competitive; however, companies
become much more effective at farming
their existing customer base for
expansion.
As evidenced in how companies allocate
their spending, focus begins to shift away
from product and towards perfecting the
GTM motion, benefiting net retention
(through upsell) at the expense of
satisfying every customer use case (gross
retention).
A R R S C A L E
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
98%
96%
95%
84%
90%
85%
100%
100%
106%
103%
105%
105%
80%
85%
90%
95%
100%
105%
110%
<$1M
$1-2.5M
$2.5M-10M
$10-20M
$20-50M
>$50M
GDR NDR
R E T E N T I O N R A T E S ( A N N U A L )
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Net retention by target customer type
Regardless of segment, a competitive
NDR rate lies between 100% and 110%.
Where we used to see meaningfully
higher variance among VSB and SMB
segments, 2021 respondents indicate
VSB is now the least variable segment,
with the rest relatively equal (looking at
interquartile ranges from 2020 to 2021).
While we’re encouraged by the reduced
spread amongst smaller SMB’s, VSB
median NDR remains the same since
2020 – churn remains a complex
challenge for vendors selling to smaller
businesses.
T A R G E T C U S T O M E R T Y P E
N E T D O L L A R R E T E N T I O N R A T E S ( A N N U A L )
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
80%
85%
90%
95%
100%
105%
110%
115%
120%
VSB
SMB
Midmarket
Enterprise
Bottom Quartile
Median
Top Quartile
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Equity capital raised by ARR*
Frothy markets paired with venture
investors who are motivated to deploy
record amounts of capital have provided
companies with more access to cash than
ever before.
Mid-size companies ($10–20M ARR) are
increasingly raising large amounts of
equity capital (29% have raised >$50M,
up from 10% last year).
Early-stage companies (<$1M ARR) are
also raising more, with 14% bringing in
between $10–50M of equity capital (up
from 0% last year).
E Q U I T Y C A P I T A L R A I S E D
A R R S C A L E
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
Note*: Excludes companies that haven’t raised capital
70%
62%
26%
4%
8%
14%
12%
21%
4%
5%
19%
31%
14%
8%
8%
4%
15%
54%
54%
40%
3%
4%
8%
29%
25%
60%
0%
20%
40%
60%
80%
100%
<$1M
$1-2.5M
$2.5M-10M
$10-20M
$20-50M
>$50M
< $5M
$5-10M
$10-20M
$20-50M
>$50M
25
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$50
$100
$150
$200
$250
$300
$350
$400
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
21 Median
2020 Median
Monthly cash burn
Expansion stage businesses who were still
refining product-market fit and their go-to-
market activities heading into the
pandemic seem to have overcorrected
for burn given the uncertainty around
customer demand. This year we saw a
reversion to higher burn rates, no doubt
facilitated by large amounts of capital
available amid resurgent demand.
Outside of the expansion stage ($2.5–
20M ARR), burn remained consistent with
last year’s report.
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225. $0 burn implies breakeven
or profitable.
A R R S C A L E
M O N T H L Y C A S H B U R N ( $ 0 0 0 ’ S )
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$2
$4
$6
$8
$10
$12
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Monthly burn per FTE by ARR
Software companies’ largest expense is
typically headcount. After normalizing
burn for the turbulence relating to
headcount last year, a clearer picture
emerges.
Early-stage companies (<$1M ARR) are
raising more and burning much more per
head than they were in 2020 (YoY
increase of $3,500 per FTE). This may be
a function of the increase in absolute
amounts of capital raised, which allows
for more product experimentation before
monetization (offsetting burn).
While the expansion stage ($2.5-20M)
burned more this year than last on an
absolute basis, it appears this may have
been a function of adding more heads
given median per head values.
A R R S C A L E
M O N T H L Y C A S H B U R N P E R F T E ( $ 0 0 0 ’ S )
2020 Median
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225. $0 burn implies breakeven
or profitable.
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PRODUCT-LED GROWTH
INSIGHTS
V.
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WHAT I S
PRODUCT-LED GROWTH?
Product-led growth (PLG) is an end user-focused
growth model that relies on the product itself as
the primary driver of customer acquisition,
conversion and expansion.
PLG is employed by many of the fastest
growing software companies including
standout public companies.
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Not all enterprise SaaS is created equal; the case for PLG
Product-led companies are always “open
for business”, and their lower ACV entry
prices are less susceptible to budget cuts.
In fact, our Product-Led Growth index has
outperformed the SaaS index we track by
nearly 2x since January 2020 – while all
have performed strongly, PLG revenue is
clearly worth more to investors.
% C H A N G E I N I N D E X
Source: Pitchbook as of 9/30/2021. SaaS index multiples calculated as enterprise value / revenue and represent median
value as of each date for the ~70 public SaaS companies OpenView tracks.
-50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
Jan
20
Feb
20
Mar
20
Apr
20
May
20
Jun
20
Jul
20
Aug
20
Sep
20
Oct
20
Nov
20
Dec
20
Jan
21
Feb
21
Mar
21
Apr
21
May
21
Jun
21
Jul
21
Aug
21
Sep
21
PLG Index
SaaS Index
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Source: 2021 OpenView Financial & Operating Metrics Survey, N=225. PLG Companies defined as
those leveraging more than three of the PLG strategies surveyed.
Adoption of product-led growth strategies
Despite our best efforts at evangelizing
PLG, most companies are still
experimenting, but still very few
companies have gone all-in – just 23% of
respondents report PLG being
fundamental to their business which is
slightly down from last year.
Although free trials remain the most
popular product-led growth strategy,
respondents have begun to de-prioritize
free trials (90% in 2020) in favor of
higher-impact alternatives like adding
dedicated growth resources (up more
than 10% vs 2020).
PLG
Companies
All
Companies
Free trial offering
74%
47%
Bottoms-up sales
64%
41%
Dedicated growth resources (FTEs)
64%
21%
In-product onboarding
63%
28%
Self-service buying experience
62%
29%
Product analytics for decision making
51%
28%
Referral Programs
50%
35%
Product Qualified Leads
47%
24%
Freemium offering
47%
18%
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48%
46%
35%
25%
52%
54%
65%
75%
VSMB
SMB
Midmarket
Enterprise
PLG Non-PLG
Product-led growth by target customer segment
Companies targeting VSB/SMB customers
are adopting product-led growth
strategies at an increasing rate (up 5%
and 8%+ since last year, respectfully).
Every target segment saw a YoY uptick in
PLG adoption besides large enterprises.
T A R G E T S E G M E N T
% O F R E S P O N D E N T S
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225. PLG Companies defined
as those leveraging more than three of the PLG strategies surveyed.
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40%
45%
45%
23%
27%
20%
9%
9%
23%
18%
40%
45%
45%
54%
55%
<$1M
$1-2.5M
$2.5M-10M
$10-20M
$20-50M
<$5k
$5-10k
>$10k
Product-led growth ACVs by ARR scale
% O F R E S P O N D E N T S
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225. PLG Companies defined as those leveraging more than three of the PLG
strategies surveyed.
PLG companies land with a lower CAC at
more digestible ACVs to start, but can
drive significant expansion in accounts
over time as the product spreads
throughout large organizations.
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--
20%
40%
60%
80%
100%
120%
140%
160%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
PLG
Non-PLG
Product-led businesses grow faster
We used to observe PLG companies
growing more slowly than their peers at
earlier stages; they’re now outpacing
their non-PLG peers at all ARR scales.
This may be because they are able to
raise the capital required to fuel early
product development and usage growth
without monetizing, then sustain that
momentum as they gain product-market
fit and deliver more value to customers as
the company matures.
A R R S C A L E
M E D I A N G R O W T H R A T E
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225. PLG Companies defined
as those leveraging more than three of the PLG strategies surveyed.
GO-TO-MARKET
INSIGHTS
VI.
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50%
100%
150%
200%
250%
300%
350%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Median
Top Quartile
Growth rate by company ARR
Growth rate is more closely correlated
with SaaS valuations than ever before.
Software companies grow rapidly in their
early stages – a typical company doubles
YoY and a top quartile company more
than quadruples.
Besides the $20—50M ARR bucket,
median growth rates have risen vs. 2020.
While we can reasonably expect 2020
growth was stunted by the impacts of the
pandemic and any slowdown in
operating investments, we’re encouraged
to see companies stepping back on the
gas.
Top quartile growth rates for early-stage
companies are increasing two and three-
fold from 2020 (<$1M ARR and $1—2.5M
ARR, respectively). Companies are being
founded and funded… and customers are
back to buying!
A R R S C A L E
G R O W T H R A T E ( A N N U A L )
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
2020 Median
Top quartile growth for early-stage
companies has skyrocketed since 2020
+120%
+200%
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10%
20%
30%
40%
50%
60%
70%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Sales & marketing spend by ARR
Sales & marketing expenses typically
become a SaaS company’s largest
areas of spend with increased scale,
overtaking product and engineering,
which dominates spend at the earlier
stages.
After the product has been built and
product-market fit has been found, it’s
time to monetize! We continue to see
companies invest more heavily as a
percent of ARR when they enter the
expansion stage at $1M of ARR. This
reduces as companies scale and press
for operational excellence in sales.
A R R S C A L E
S A L E S & M A R K E T I N G S P E N D ( % O F A R R )
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
2020 Median
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20%
40%
60%
80%
100%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Product & engineering spend by ARR
Product & engineering expenses are
usually the first place SaaS companies
prioritize spend as they work towards
product-market fit.
Median spend was relatively flat across
ARR stages besides the earliest (<$1M
ARR), which saw a massive dip versus
2020 (median down 18%). This could be
due to hiring issues, where the smallest
companies simply can’t find/attract the
right engineering talent, or ova
companies benefitting from increased
early-stage funding are choosing to invest
in other functional areas sooner (e.g.
Sales).
A R R S C A L E
P R O D U C T & E N G I N E E R I N G S P E N D ( % O F A R R )
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
2020 Median
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5%
10%
15%
20%
25%
30%
35%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
General & administrative spend by ARR
General & administrative expenses are
reliably the smallest area of spend
among SaaS businesses.
In fact, over the last four years of this
report, G&A has yet to crack >25% of
total operating expense spend at any
ARR scale, with the lion’s share being
allocated between developing (product &
engineering) and monetizing (sales &
marketing) the product.
A R R S C A L E
G E N E R A L & A D M I N I S T R A T I V E S P E N D ( % O F A R R )
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
2020 Median
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Sales & marketing vs product & engineering spend by ARR
The waxing and waning relationship
between sales and product spend has
been a consistent observation in each of
the last four years of this report, with each
bucket of spend reaching it’s maximum
(% of ARR) at the smallest (product) and
largest (sales) ARR scale.
However, the ARR threshold where this
shift in spend occurs continues to creep
upwards ($2.5M in 2019, to $10M in
2020, to $20M in 2021), suggesting
business focus remains on the product for
longer as companies and their
shareholders are more focused on
customer value creation for longer.
A R R S C A L E
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
M E D I A N S P E N D ( % O F A R R )
25%
30%
32%
34%
35%
50%
50%
40%
34%
39%
25%
30%
--
10%
20%
30%
40%
50%
60%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Sales & Marketing
Product & Engineering
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5
10
15
20
25
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Months to recover CAC (CAC payback)
A R R S C A L E
C A C P A Y B A C K I N M O N T H S ( 1 )
CAC payback generally lengthens when
companies achieve greater ARR scale –
but watch out for worsening your go-to-
market efficiency as you grow. This year’s
slip in payback data versus 2020 may
simply be a follow-on effect of rehiring
after the pandemic adding transient bloat
to CAC, or a function of companies
staffing up not yet ramped sales
resources in response to increased
customer demand.
In our opinion, companies are still under-
reporting their true CAC Payback period.
Be sure your payback is fully loaded
(including overhead like rent) and that it is
gross margin affected.
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
(1) Excluded companies <$1M ARR because they don’t have enough data for predictable CAC payback..
2020 Median
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CASH FLOW
INSIGHTS
VII.
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EVERYTH ING I S VALUED
ON CASH FLOW…
…Eventually! The present value of future cash flows
(calculated in a Discounted Cash Flow Analysis) is
what any business is intrinsically worth. Of course,
when you’re running a private company in a large
market that has raised venture capital the aim is for
you to grow fast and burn money creating value
for customers so that one day you can capture
value and generate cash (even if it is years away).
But even before your business does $1B in revenue
with 25% free cash flow margins, managing cash
efficiently is critical.
Would you rather charge your customers annually
up front and reinvest that cash immediately, or wait
to have them pay you monthly in arrears? Yes, there
are considerations and tradeoffs specific to your
customers and their needs but conceptually
collecting cash to reinvest sooner is better. Take
customer’s capital and your investors capital and
reinvest even more to grow even faster!
In the pages that follow, we’ll detail specific insights
generated by our survey sponsor Tesorio about
balance sheet data based on a company’s
revenue scale.
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157
90
97
--
20
40
60
80
100
120
140
160
180
Dec'19Jan'20Feb'20Mar'20Apr'20May'20Jun'20Jul'20Aug'20Sep'20Oct'20Nov'20Dec'20Jan'21Feb'21Mar'21Apr'21May'21Jun'21Jul'21Aug'21Sep'21<$50M
$50-100M
>$100M
Days Sales Outstanding
GAAP revenue or billings growth is great
but fueling that momentum requires
cash (and a lot of it as evidenced in this
report). Days Sales Outstanding (”DSO”)
is a popular way of understanding how
efficiently invoices are being converted
to cash.
Because DSO is calculated using Credit
Sales as its denominator, it’s important
to note how changes in sales can affect
this statistic.
When using DSO as our measuring stick,
companies at the earliest stages
(<$50M revenue) appear to face
tougher collection cycles – a trend
highlighted by the pandemic.
M o n t h
# o f D a y s
Source: Tesorio. Includes only Software/SaaS customers.
Note: May’20 highlighted as the approximate peak effect of COVID-19 on cash flow metrics.
Days Sales Outstanding (“DSO”) = Credit Sales / # Days in the Period
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Average Days Delinquent
Similar to DSO, Average Days
Delinquent (”ADD”) underscores the
same conclusion – smaller companies
are more susceptible to systemic risk.
While ADD for small and mid-size
companies had largely reverted to pre-
COVID levels by 2021, larger
companies (>$100M revenue)
managed to improve their ADD since
the pandemic, from 15 to 10.
COVID highlighted the importance of
quickly collecting cash from invoices,
larger companies were simply the only
ones with the firepower (talent, cash,
etc.) to do something about it.
M o n t h
# o f D a y s
23
16
15
--
5
10
15
20
25
Dec'19Jan'20Feb'20Mar'20Apr'20May'20Jun'20Jul'20Aug'20Sep'20Oct'20Nov'20Dec'20Jan'21Feb'21Mar'21Apr'21May'21Jun'21Jul'21Aug'21Sep'21<$50M
$50-100M
>$100M
Source: Tesorio. Includes only Software/SaaS customers.
Note: May’20 highlighted as the approximate peak effect of COVID-19 on cash flow metrics.
Average Days Delinquent (“ADD”) = Average # of Days from the Due Date to Payment Date
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Average Days Collected
Average Days Collected (“ADC”)
provides an important counterbalance
to viewing cash collections through DSO
or ADD.
Measured as the number of days it takes
for invoices to be collected, businesses
tend to collect cash at similar rates,
regardless of scale.
This offers an important perspective,
suggesting that the increase in DSO for
smaller companies (<$50M revenue)
was likely due to a sharper decline in
Credit Sales than larger, more
established peers.
M o n t h
# o f D a y s
Source: Tesorio. Includes only Software/SaaS customers.
--
10
20
30
40
50
60
Dec'19Jan'20Feb'20Mar'20Apr'20May'20Jun'20Jul'20Aug'20Sep'20Oct'20Nov'20Dec'20Jan'21Feb'21Mar'21Apr'21May'21Jun'21Jul'21Aug'21Sep'21<$50M
$50-100M
>$100M
Average Days Collected (“ADC”) = Average # Days from the Invoice Date to Payment Date
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Average Terms
The Average Terms offered across
software companies unsurprisingly
increase with scale, as larger businesses
have greater ability to extend credit to
their customers.
Taken with ADC, we can clearly see that
the pandemic did not disrupt cash
collections for smaller companies as
much as DSO and ADD might imply.
While certainly more sensitive to
systemic fluctuations, differences in cash
collection seem to boil down to smaller
companies not being able to offer the
same favorable terms as their larger
counterparts.
M o n t h
# o f D a y s
Source: Tesorio. Includes only Software/SaaS customers.
--
5
10
15
20
25
30
35
40
Dec'19Jan'20Feb'20Mar'20Apr'20May'20Jun'20Jul'20Aug'20Sep'20Oct'20Nov'20Dec'20Jan'21Feb'21Mar'21Apr'21May'21Jun'21Jul'21Aug'21Sep'21<$50M
$50-100M
>$100M
Average Terms = Average # Days from the Invoice Date to Due Date
TALENT
INSIGHTS
VIII.
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29%
13%
28%
15%
30%
18%
61%
12%
51%
38%
26%
13%
16%
13%
12%
59%
12%
48%
--
10%
20%
30%
40%
50%
60%
70%
Hiring the best
talent
Hiring fast
enough to
meet plan /
budget
Don’t have the
right expertise
/ skills on the
team
Fundraising
Burning too
much cash
Competitive
pressure /
threat
GTM execution Changing
customer
needs
Product
execution
2020
2021
What’s keeping founders up at night?
Although it’s becoming harder to hire
talented headcount [1] (and hire that
talent quickly [2]), founder feedback
seems to suggest that cuts to headcount
during the pandemic were precise
enough to effectively consolidate
expertise within their organizations [3].
It appears that having access to more
capital has led founders to be far less
concerned with how that money is spent
(burned) when compared to 2020 [4].
Perhaps investors are quick to grant a
(temporary) “COVID-pass” on cash burn
– in any case, a notable shift that we
didn’t expect to see.
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
% O F R E S P O N D E N T S ( C H O O S E 3 )
[1]
[2]
[3]
[4]
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--
50
100
150
200
250
300
350
400
450
500
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Number of employees by ARR scale
In the early stages, companies have one
employee for every $95k in ARR. As
companies scale to $10-20M, that figure
jumps to $130k. Best-in-class is $200k+.
On average, 33% of employees are in
Engineering, 27% in S&M, 12% in
Customer Success and 11% in Product (all
within 2% of 2020’s distribution).
Each early and expansion stage (<$20M
ARR) median employee count is up at
least 45% from 2020, suggesting
companies are re-hiring and returning to
normal course after a turbulent 2020.
A R R S C A L E
N U M B E R O F E M P L O Y E E S
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
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Mix of employees by function, by ARR scale
At the early stages, most startup
employees are in Product & Engineering
roles. However, as companies expand,
they need to rapidly grow Customer
Success and specialized functions to
sustain rapid revenue growth.
We notice that Product & Engineering
tends to be the main tradeoff as
companies scale – once the product is
built, commercial activities take priority.
While the output of these activities scales
more, emphasizing product-led
approaches can also contribute to go to
market success.
F T E M I X B Y F U N C T I O N
A R R S C A L E
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
38%
36%
36%
31%
30%
23%
15%
12%
11%
11%
9%
12%
9%
9%
9%
9%
11%
10%
17%
18%
18%
19%
24%
24%
9%
13%
13%
15%
13%
12%
13%
12%
12%
15%
14%
19%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Engineering
Product
Marketing
Sales
Customer Success
Other
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Progress on gender equality
Larger companies continue to fare
slightly better when it comes to
gender diversity within
management teams.
42% of respondents had one or
more female BoD member,
consistent with last year.
Meanwhile, 6% had gender parity
on the BoD and 16% had parity
among their leadership team.
Although diversity has been a
trend in this report for years, it has
been stagnant despite research
showing that younger members of
the workforce prioritize
organizations that are diverse and
inclusive of all people.
2017
2018
2019
2020
2021
1+ FEMALE BOD
MEMBER
29%
37%
38%
42%
42%
GENDER PARITY
IN LEADERSHIP
12%
13%
14%
14%
16%
GENDER PARITY
ON BOD
4%
8%
8%
6%
6%
Source: 2021 OpenView Financial & Operating Metrics Survey, N=225.
ABOUT THE
AUTHORS
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SEAN
Fanning
Sean Fanning is a Vice President on OpenView’s
Investment Team responsible for identifying,
evaluating and executing on investment
opportunities. He previously supported OpenView’s
Expansion Team on Corporate Development,
Portfolio Analysis, and Growth. Sean writes a semi-
regular newsletter on all thing's software and
capital markets, Capital Markets Roundup.
sean@ov.vc
@seandougfan
/seandfanning
V I C E P R E S I D E N T
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KYLE
Poyar
Kyle helps OpenView’s portfolio companies
accelerate top-line growth through deep insights
into their market landscape and customers. He
leads segmentation, positioning, channel/partner
strategy, new market entry and packaging/pricing
initiatives, partnering closely with portfolio
leadership teams. Kyle writes a regular newsletter,
Growth Unhinged.
kyle@ov.vc
@poyark
/kyle-poyar
O P E R A T I N G P A R T N E R
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TOM
KENYON
Tom is a Portfolio & Investment Analysis Associate on
OpenView’s Capital Markets team. He works closely
with OpenView’s portfolio companies advising on
and executing M&A and capital raise transactions,
as well as supporting exit planning activities.
tomk@ov.vc
/thomas-kenyon
A S S O C I A T E , P O R T F O L I O
I N V E S T M E N T & A N A L Y S I S
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SAM
JOHNSON
Sam is a Corporate Development Associate on
OpenView’s Capital Markets team. He works with
OpenView’s portfolio companies on all inorganic
and balance sheet related initiatives, from debt and
equity fundraising, IPO preparation, and buy and
sell side M&A.
samj@ov.vc
/samcarl johnson
A S S O C I A T E , C O R P O R A T E
D E V E L O P M E N T
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Our mission is to improve people’s working lives.
We do this by:
•
Investing in the best software companies
• Helping our portfolio companies accelerate
growth and become market leaders
Learn more at ov.vc
THE EXPANS ION S TAGE
SOFTWARE VC
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THANK
YOU