About Techcelerate Ventures
Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
2020
EXPANSION SAAS
BENCHMARKS
View the interactive report at saasbenchmarks.com
SEAN FANNING & KYLE POYAR
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Go-to-Market
Insights
TABLE OF CONTENTS
Enterprise
Software is
Recession
Proof
Introduction
Participant
Overview
Executive
Summary
Talent
Insights
Product
Led Growth
Insights
Financial &
Operating
Insights
1
2
3
4
5
6
7
8
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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 fourth annual Expansion 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
June to September. This 2020 benchmark report
incorporates data from more than 1200
respondents aggregated across prior surveys as
well as more than 400 this year alone.
Data from our 2020 survey answered the burning
question on everyone’s mind: “What was the
impact of COVID on enterprise software?” The
answer: enterprise software is recession
proof.
This year’s benchmarks report also explores topics
including executive diversity and founder attitudes,
in addition to our usual insights on product led
growth, go-to-market, and other data key to
operating and growing a successful expansion
stage software business.
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THANKS TO OUR SURVEY PARTNERS
PARTICIPANT
OVERVIEW
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DI S TR I B U T I O N B Y G E O G R A PHY
DI S TR I B U T I O N B Y A R R
Source: 2020 OpenView SaaS Metrics Survey, N=409.
46%
30%
5%
7%
12%
US
Europe
Canada
APAC Other
21%
15%
27%
15%
12%
10%
<$1M $1-2.5M $2.5-10M $10-20M $20-50M >$50M
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38%
29%
3%
10%
4%
16%
CEO / Founder / Co-Founder
CFO / VP Finance
CMO / VP Marketing
COO / VP of Operations
CRO / VP of Sales
Other
DI S TR I B U T I O N B Y
TA R G E T C U S TO ME R S I Z E
DI S TR I B U T I O N B Y
RE S PO ND E NT RO LE
Source: 2020 OpenView SaaS Metrics Survey, N=409.
2%
9%
21%
33%
35%
Consumer
Very small business
(VSB, <20 employees)
SMB (20-100 employees)
Midmarket (101-1,000 employees)
Enterprise (>1,000 employees)
EXECUTIVE
SUMMARY
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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 Q2 2020.
Funding
Amount of equity capital raised to date.
Annual Recurr ing Revenue (ARR)
Company annual recurring revenue (ARR) scale at the end of Q2 2020.
YoY Growth Rate
Change in annual recurring revenue at the end of Q2 2020 vs. Q2 2019.
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 Q2 2020.
R&D Spend
Spending on R&D, including headcount, as a % of ending ARR as of Q2 2020.
Gross Margins
Subscription revenue less cost of goods sold divided by subscription revenue at the end of Q2 2020.
Monthly Burn Rate ( in 000’s)
Net monthly operating cash burn rate at the end of Q2 2020 (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 Retent ion
Annual gross dollar retention (after churn, exclusive of upsells & expansion) seen in cohorts.
Net Dol lar Retent 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 Leadership
% of female representation among employees Director-level and above.
Underrepresented Minori t ies in Leadership
% of underrepresented minority representation among employees Director-level and above.
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HOW TO READ THESE SLIDES
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719)
[N/A]
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
Rows represent common KPIs across
categories including size and growth,
financial, value drivers, and diversity
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HOW TO READ THESE SLIDES
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719)
[N/A]
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
Columns represent distribution of
responses from companies at varying
levels of ARR, from <$1M to >$50M
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HOW TO READ THESE SLIDES
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719)
[N/A]
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
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
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SAAS METRICS BY ARR
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719) $0 ($0-375)
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
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SAAS METRICS BY ARR (2020 vs. 2019)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (↑ 2)
25 (0)
52 (↑ 5)
93 (↓ 7)
220 (↑ 40)
495 (↓ 60)
YoY Growth Rate
100% (↑ 20%)
60% (↓ 20%)
41% (↓ 9%)
46% (↓ 4%)
50% (↓ 10%)
21% (↓ 8%)
F I N A N C I A L
Sales & Market ing Spend
20% (↓ 10%)
30% (0%)
30% (↓ 5%)
35% (↓ 5%)
31% (↓ 11%)
29% (↓ 9%)
R&D Spend
68% (↑ 18%)
40% (↓ 8%)
32% (↑ 2%)
28% (↓ 2%)
27% (↓ 3%)
22% (↑ 2%)
Gross Margins
67% (↓ 3%)
75% (↑ 2%)
78% (↓ 2%)
79% (↑ 4%)
79% (↑ 4%)
75% (0%)
Monthly Burn Rate ($ in 000s)
$50 ($0)
$50 ($0)
$175 ($0)
$200 (↓ $175)
$375 ($0)
$0 (↓ $50)
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (↑ 3)
10 (↑ 2)
11 (0)
11 (↓ 4)
15 (0)
15 (0)
Gross Dol lar Retent ion
90% (0%)
90% (0%)
90% (0%)
87% (↓ 1%)
87% (↓ 2%)
90% (↑ 2%)
Net Dol lar Retent ion
99% (↓ 1%)
100% (0%)
103% (↑ 3%)
102% (↑ 7%)
105% (↑ 3%)
105% (↑ 8%)
D I V E R S I T Y
Women in Leadership
10% (0%)
20% (-5%)
25% (+5%)
29% (+4%)
20% (-5%)
15% (-14%)
Underrepresented Minori t ies in Leadership
10% (N/A)
0% (N/A)
0% (N/A)
0% (N/A)
0% (N/A)
0% (N/A)
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SAAS 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
16 (8-27)
46 (25-88)
109 (53-195)
120 (74-196)
272 (173-557)
Funding
$3M ($0.5-3M)
$8M ($8-15M)
$28M ($15-43M)
$43M ($28 -63M)
$88M ($43-100M)
Annual Recurr ing Revenue (ARR)
$2M ($0.5-2M)
$6M ($2-6M)
$15M ($6-15M)
$15M ($6-35M)
$50M ($35-50M)
YoY Growth Rate
60% (26-100%)
60% (30-105%)
44% (27-74%)
35% (14-64%)
27% (19-50%)
F I N A N C I A L
Sales & Market ing Spend
25% (13-40%)
30% (20-44%)
40% (26-60%)
31% (20-43%)
37% (20-47%)
R&D Spend
50% (30-80%)
30% (20-50%)
30% (23-44%)
29% (15-35%)
29% (12-40%)
Gross Margins
76% (40-85%)
75% (62-86%)
75% (67-85%)
75% (63-81%)
78% (73-81%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$175 ($50-375)
$375 ($50-625)
$375 ($50-750)
$375 ($0-1,531)
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (5-14)
11 (8-15)
15 (11-15)
13 (11-21)
15 (11-28)
Gross Dol lar Retent ion
90% (78-95%)
90% (76-96%)
90% (80-96%)
86% (79-90%)
90% (83-96%)
Net Dol lar Retent ion
100% (87-110%)
103% (91-113%)
103 (98-112%)
103% (92-110%)
105% (96-113%)
D I V E R S I T Y
Women in Leadership
23% (0-38%)
22% (6-38%)
25% (15-40%)
28% (11-36%)
16% (10-36%)
Underrepresented Minori t ies in Leadership
0% (0-29%)
0% (0-15%)
1% (0-10%)
3% (0-15%)
6% (0-20%)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
ENTERPRISE
SOFTWARE
IS RECESSION
PROOF
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ENTERPRISE SOFTWARE IS RECESSION PROOF
Public SaaS is more valuable than ever
before – after falling nearly 50% from
all-time-highs in March, SaaS valuations
have rallied on the back of persistent
long-term tailwinds. Plus, as investors
mature in their evaluation of B2B
markets, unit economics & defensibility,
the future price uncertainty of the assets
seems to be reduced. These factors
have created exuberance in the
market.
Despite the uncertainty of the COVID-
induced economic recession enterprise
software is largely proving to be
recession proof as enterprise digital
transformations continue.
% Change in Index
Source: Pitchbook as of 9/10/2020. 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%
50%
100%
150%
200%
SaaS
NASDAQ
S&P
1/1/20
10/30/20
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PUBLIC MARKET DEMAND FOR SAAS REMAINS ROBUST
Investor demand for public software
equities remains incredibly strong.
And the companies that are going
public in 2020 are extremely
impressive. They’re largely growing
faster and sustaining high growth
longer, growing more efficiently,
raising less capital at scale, and getting
to be on average older compared to
previous IPO cohorts.
These summary data are even more
impressive when you exclude outliers
like Zoom in 2019 and Snowflake in
2020.
Source: Pitchbook as of 9/10/2020
IPOs
Capital
TTM Financials (per S-1)
Count Age @
IPO
Raised
Revenue Growth Gross
Margin
Net Dollar
Retention
CAC
Payback
2018
16
12.2
$300.8
$168.1
39.2%
71.2%
115%
30.0
months
2019
12
11.3
$220.0
$250.3
57.7%
74.9%
131%
19.2
months
2020
11
12.9
$283.5
$155.1
51.0%
76.6%
120%
18.5
months
IPO Data
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CUSTOMER DEMAND FOR SAAS REMAINS STRONG
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Enterprise SaaS has been recession
proof and the buying environment
for software remains robust. Roughly
~2/5 of respondents to our 2020
survey reported less than a 10%
decrease in expected 2020 ARR
while ~1/5 of respondents saw no
impact to budget at all.
Even after aggressive expense cuts
and revenue reforecasts many
companies maintained aggressive
topline revenue targets.
21%
18%
34%
18%
7%
2%
No impact / positive impact 0 to -9% impact
-10 to -24% impact
-25 to -49% impact
-50 to -99% impact
N/A / impact is unknown
% Impact from COVID on Expected Budget
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SO, IT’S TIME FOR COMPANIES TO HIT THE GAS AGAIN
2018
2019
2020
Growth Rate
54%
48%
43%
Net Dollar Retention
100%
99%
102%
Payback Period 12 months
11 months
11 months
R&D Spend as % of Revenue
30%
30%
30%
Sales & Marketing Spend as %
of Revenue
40%
35%
30%
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Excludes companies <$1M ARR.
Companies reacted aggressively to COVID,
but our data suggests companies are
acquiring and retaining their customers as
efficiently as ever. They’re just not spending
nearly enough on acquisition to reach
those customers (sales & marketing
expense fell 14% YoY) who have
demonstrated they still want to invest in
digital transformation! As a result, median
growth rates have dropped from 2019.
The buying environment remains
strong, so it is time to get back to
acquiring customers… or get left
behind!
Historical SaaS Benchmarks by Year* (Median)
GO-TO-MARKET
INSIGHTS
22
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0%
25%
50%
75%
100%
125%
150%
175%
200%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Median
Top Quartile
GROWTH RATE BY COMPANY ARR
Growth rate is highly correlated with
SaaS valuations. Software companies
grow rapidly in their early stages – a
typical company doubles YoY and a
top quartile company nearly triples.
Except for at the very earliest stages,
growth rates have fallen vs. 2019 but
as noted, growth (likely) didn’t slow as
a result of stunted customer demand
except in the hardest hit industries (i.e.
hospitality and retail). Rather,
companies lost their confidence
investing in revenue generating
activities.
ARR Scale
Growth Rate (Annual)
2019 Median
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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SALES AND MARKETING SPEND BY ARR
Sales and marketing expenses
are normally a SaaS company’s
largest areas of spend after they
hit ~$2.5M of ARR (before which
point product & engineering
dominates).
ARR Scale
0%
10%
20%
30%
40%
50%
60%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Sales and Marketing Spend (% of ARR)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
2019 Median
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SALES AND MARKETING SPEND BY
DOMINANT SALES CHANNEL*
Best-in-class companies selling
primarily through self service
and freemium can bring sales
and marketing spend well
below 20% of ARR.
As you look to reach your
customers where they work, you
need to reach them where they
live. Leveraging an “always
open” self serve model can
drive more efficient acquisition.
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Dominant sales channel is sales channel with greatest ARR contribution per account
Dominant Sales Channel
0%
10%
20%
30%
40%
50%
60%
Self Serve
Inside
Field
Indirect
Bottom Quartile
Median
Top Quartile
Sales and Marketing Spend (% of ARR)
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DOMINANT SALES CHANNEL* BY
CUSTOMER TYPE
Inside sales is the most popular
sales channel in SaaS and is
used to reach customers of all
sizes, even very small
businesses.
Make sure sales channels are
supported by your average deal
size (do you make enough to
pay competitive sales
commissions?) and how your
customers prefer to buy.
Target Customer Type
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Dominant sales channel is sales channel with greatest ARR contribution per account
13%
9%
4%
50%
62%
50%
33%
13%
18%
32%
53%
24%
11%
14%
13%
VSB
SMB
Midmarket
Enterprise
Self Serve
Inside
Field
Indirect
Sales Channel Mix (% of ARR)
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0
5
10
15
20
25
30
35
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Top Quartile
Median
Bottom Quartile
MONTHS TO RECOVER CAC (CAC PAYBACK)
ARR Scale
CAC Payback in Months*
CAC payback lengthens when
companies achieve greater ARR scale
– watch out for worsening your go-to-
market efficiency as you grow. We’re
encouraged by this year’s CAC
payback data, which suggests
companies have adapted messaging
and are still reaching their customers
effectively.
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: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Excluded companies <$1M ARR because they don’t have enough data for predictable CAC payback..
2019 Median
PRODUCT LED
GROWTH
INSIGHTS
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WHAT IS 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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PRODUCT LED GROWTH IS YOUR
SECRET WEAPON
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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 entry prices are less
susceptible to budget cuts. In
fact, the SaaS companies in our
PLG Index trade at a nearly 50%
premium to the broader SaaS
index, proving that product led
revenue is more valuable.
% Change in Index
Source: Pitchbook as of 9/10/2020. 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%
50%
100%
150%
200%
250%
300%
PLG
SaaS
1/1/20
10/30/20
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ADOPTION OF PRODUCT LED
GROWTH STRATEGIES
Despite our best efforts at evangelizing
PLG, most companies are still
experimenting, but relatively few have
gone ‘all in’ (just 27% of respondents
report PLG being fundamental to their
business).
Free trials remain the most popular
product led growth strategy, but a free
trial is not enough to be PLG –
companies need to rally their entire
organizations – from sales, marketing,
product, engineering and success –
around product led growth strategies.
PLG
Companies
All
Companies
Free trial offering
90%
46%
In-product onboarding
71%
29%
Product analytics for decision making
69%
32%
Self-service buying experience
67%
26%
Bottoms-up sales
67%
38%
Dedicated growth resources (FTEs)
53%
28%
Freemium offering
52%
25%
Product Qualified Leads
47%
19%
Source: 2020 OpenView SaaS Metrics Survey, N=409. PLG Companies defined as those leveraging more than three of the PLG
strategies surveyed.
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PRODUCT LED GROWTH BY
TARGET CUSTOMER SEGMENT
Product led growth is especially
prevalent among companies
targeting VSB/SMB customers.
That said, 3 in 10 companies
targeting large enterprises also
employ PLG tactics – PLG is for
the enterprise, too.
42%
37%
34%
27%
58%
63%
66%
73%
VSB
SMB
Midmarket
Enterprise
PLG Non-PLG
Target Segment
% of respondents
Source: 2020 OpenView SaaS Metrics Survey, N=409. PLG Companies defined as those leveraging more than three of the PLG
strategies surveyed.
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PRODUCT LED GROWTH ACVs
BY ARR SCALE
85%
89%
50%
50%
62%
33%
15%
11%
36%
43%
13%
22%
14%
7%
25%
45%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
<$25k
$25-100k
>$100k
% of respondents
Source: 2020 OpenView SaaS Metrics Survey, N=409. 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.
These companies can be much less
specific in their ideal customer
profile as they search for product
market fit, and over time target high
value customers specifically and
more efficiently.
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0%
20%
40%
60%
80%
100%
120%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
PLG
Non-PLG
PRODUCT LED BUSINESSES
GROW FASTER AT SCALE
PLG companies grow slowly in the
very early days, as it takes time to
build a community of free users and
convert those users to paying
customers.
After $10M in ARR, the magic of
PLG kicks in and these companies
can scale faster. They aren’t as
limited by their ability to hire,
onboard and feed leads to
enterprise sales reps and they’ve
built up significant goodwill from
their users.
ARR Scale
Median Growth Rate
Source: 2020 OpenView SaaS Metrics Survey, N=409. PLG Companies defined as those leveraging more than three of the PLG
strategies surveyed.
FINANCIAL &
OPERATING
INSIGHTS
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GROSS MARGIN 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.
15%
14%
16%
15%
19%
11%
10%
<50% 50 to 70% 70 to 75% 75 to 80% 80 to 85% 85 to 90% >90%
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Gross Margin on Subscription Revenue Distribution
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GROSS DOLLAR RETENTION RATES
12%
4%
6%
25%
53%
<60%
60 to 70%
70 to 80%
80 to 90%
>90%
Gross Dollar Retention Rates (Annual)
Top tier gross retention rates are
consistent (~85-90%) regardless
of last round or ARR scale.
Similarly, these rates are
consistent regardless of bull or
bear market conditions. Across
all segments, GDR was within +-
2% from 2019 to 2020. 90%+
Gross dollar retention is now
“table stakes” in enterprise
SaaS.
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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17%
11%
11%
19%
23%
7%
6%
6%
<85%
85 to 95%
95 to 100%
100 to 105%
105 to 115%
115 to 125%
125 to 135%
>135%
NET DOLLAR RETENTION RATES
2 in 5 companies surveyed
reported net dollar retention
over 105% and 1 in 10
reported NDR over 125%.
Net dollar retention tells the
whole story about what is
happening within your customer
base and should be tracked at
the cohort level to visualize
trends over time.
Net Dollar Retention Rates (Annual)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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NET RETENTION BY TARGET CUSTOMER TYPE
Regardless of segment, a
competitive NDR rate lies
between 100% and 110%.
However, VSB and SMB
segments introduce greater
variance. As SMBs become
smaller and smaller, net
retention can start to mimic B2C
software.
Target Customer Type
Net Dollar Retention Rates (Annual)
60%
70%
80%
90%
100%
110%
120%
VSB
SMB
Midmarket
Enterprise
Bottom Quartile
Median
Top Quartile
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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EQUITY CAPITAL RAISED BY ARR*
With the rise of VC growth funds,
mega-rounds and record-
breaking VC fund sizes as well
as PE firms diversifying strategies
in order to deploy capital,
companies have access to more
and more cash.
Even more modest companies
($10-$20M ARR) can raise large
amounts of equity capital (~2/3
have raised >$20M)
Equity Capital Raised
79%
48%
30%
7%
14%
36%
23%
10%
8%
9%
29%
17%
6%
8%
3%
16%
57%
71%
25%
7%
3%
2%
10%
24%
58%
0%
20%
40%
60%
80%
100%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
< $5M
$5-10M
$10-20M
$20-50M
>$50M
ARR Scale
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Excludes companies that haven’t raised capital
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MONTHLY CASH BURN
Burn was subject to two forces.
Companies’ responses to COVID
would intuitively decrease burn.
Large amounts of investor
capital would intuitively raise it.
As both customer and investor
demand for software assets
remains strong, burn remained
consistent with last year’s report.
Source: 2020 OpenView SaaS Metrics Survey, N=409. $0 burn implies breakeven or profitable.
ARR Scale
Monthly Cash Burn ($000’s)
$0
$50
$100
$150
$200
$250
$300
$350
$400
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
2020 Median
2019 Median
TALENT
INSIGHTS
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NUMBER OF EMPLOYEES BY ARR SCALE
In the early stages, companies
have one employee for every
$100,000 in ARR. As companies
scale to $20M, that figure jumps
to $150,000. Best-in-class is
$200,000+.
On average, 35% of employees
are in Engineering and another
20% are in Sales. The next
largest functions are Product
(12%) and Customer Success
(11%).
ARR Scale
0
200
400
600
800
1000
1200
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Number of Employees
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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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 Engineering tends to
be the main tradeoff as companies
scale – once the product is built,
commercial activities take priority.
FTE Mix by Function
45%
30%
33%
31%
32%
27%
13%
13%
12%
11%
10%
13%
9%
10%
10%
9%
10%
10%
12%
19%
17%
21%
22%
21%
9%
14%
12%
12%
11%
11%
12%
15%
15%
16%
16%
18%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Engineering
Product
Marketing
Sales
Customer Success
Other
ARR Scale
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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MIX OF EMPLOYEES BY FUNCTION,
BY DOMINANT SALES CHANNEL
Companies leveraging self
service or freemium channels
commit a greater proportion of
their resources to engineering
and product – this is particularly
evident in PLG companies who
rely on organic strategies and
product awareness to drive
inbound demand.
32%
35%
34%
39%
12%
11%
12%
18%
8%
9%
10%
17%
17%
18%
20%
8%
10%
12%
12%
7%
21%
14%
13%
12%
Indirect
Field
Inside
Self Serve
Engineering
Product
Marketing
Sales
Customer Success
Other
FTE Mix by Function
ARR Scale
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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FEMALE-LED TEAMS PERFORM BETTER, BUT
RAISE LESS CAPITAL
While female-led teams
outperform their peers (faster
growth), they are doing so with
far less equity capital ($8M vs.
$15M).
Although diversity has been a
trend in this report for years, it’s
important to remember you
can’t just talk the talk and work
still needs to be done.
46%
43%
$8M
$15M
$0M
$18M
40%
50%
50% or more female
Less than 50% female
Median Growth Rate
Median Equity Capital
Growth Rate (Annual)Equity Capital RaisedSource: 2020 OpenView SaaS Metrics Survey, N=409.
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PROGRESS ON GENDER EQUALITY
Larger companies continue to fare
slightly better when it comes to
gender diversity within
management teams, and, after
stagnation in 2019, we’re seeing
slight progress.
42% of respondents had one or
more female BoD member, which is
an uptick from last year.
Meanwhile, 6% had gender parity
on the BoD and 14% had parity
among their leadership team.
2017
2018
2019
2020
1+ female BoD
member
29%
37%
38%
42%
Gender parity
in leadership
12%
13%
14%
14%
Gender parity
on BoD
4%
8%
8%
6%
Source: 2020 OpenView SaaS Metrics Survey, N=409.
ABOUT THE
AUTHORS
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SEAN FANNING
Sean supports corporate development at
OpenView, including helping the firm’s portfolio
establish strategic relationships with potential
alliance partners and acquirers, advising on and
executing M&A and capital raise transactions,
supporting portfolio exit planning activities, and
communicating trends across M&A, PE, and public
markets.
Read Sean’s weekly Capital Markets Roundup
here!
sean@ov.vc
@seandougfan
/seandfanning
Director, Corporate Development
50
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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.
ky le@ov.vc
@poyark
/ky le-poyar
VP of Growth
KYLE POYAR
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Dan works with OpenView’s portfolio companies to
achieve and sustain best-in-class growth. He’s
supported OpenView’s Growth, Capital Markets,
and Investment teams to work with the world’s best
expansion stage software companies.
kn ight@ov.vc
@danknightnews1
/dan-c-kn ight
DAN KNIGHT
Analyst, Growth Team
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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 EXPANSION STAGE SOFTWARE VC
THANK
YOU
EXPANSION SAAS
BENCHMARKS
View the interactive report at saasbenchmarks.com
SEAN FANNING & KYLE POYAR
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Go-to-Market
Insights
TABLE OF CONTENTS
Enterprise
Software is
Recession
Proof
Introduction
Participant
Overview
Executive
Summary
Talent
Insights
Product
Led Growth
Insights
Financial &
Operating
Insights
1
2
3
4
5
6
7
8
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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 fourth annual Expansion 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
June to September. This 2020 benchmark report
incorporates data from more than 1200
respondents aggregated across prior surveys as
well as more than 400 this year alone.
Data from our 2020 survey answered the burning
question on everyone’s mind: “What was the
impact of COVID on enterprise software?” The
answer: enterprise software is recession
proof.
This year’s benchmarks report also explores topics
including executive diversity and founder attitudes,
in addition to our usual insights on product led
growth, go-to-market, and other data key to
operating and growing a successful expansion
stage software business.
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THANKS TO OUR SURVEY PARTNERS
PARTICIPANT
OVERVIEW
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DI S TR I B U T I O N B Y G E O G R A PHY
DI S TR I B U T I O N B Y A R R
Source: 2020 OpenView SaaS Metrics Survey, N=409.
46%
30%
5%
7%
12%
US
Europe
Canada
APAC Other
21%
15%
27%
15%
12%
10%
<$1M $1-2.5M $2.5-10M $10-20M $20-50M >$50M
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38%
29%
3%
10%
4%
16%
CEO / Founder / Co-Founder
CFO / VP Finance
CMO / VP Marketing
COO / VP of Operations
CRO / VP of Sales
Other
DI S TR I B U T I O N B Y
TA R G E T C U S TO ME R S I Z E
DI S TR I B U T I O N B Y
RE S PO ND E NT RO LE
Source: 2020 OpenView SaaS Metrics Survey, N=409.
2%
9%
21%
33%
35%
Consumer
Very small business
(VSB, <20 employees)
SMB (20-100 employees)
Midmarket (101-1,000 employees)
Enterprise (>1,000 employees)
EXECUTIVE
SUMMARY
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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 Q2 2020.
Funding
Amount of equity capital raised to date.
Annual Recurr ing Revenue (ARR)
Company annual recurring revenue (ARR) scale at the end of Q2 2020.
YoY Growth Rate
Change in annual recurring revenue at the end of Q2 2020 vs. Q2 2019.
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 Q2 2020.
R&D Spend
Spending on R&D, including headcount, as a % of ending ARR as of Q2 2020.
Gross Margins
Subscription revenue less cost of goods sold divided by subscription revenue at the end of Q2 2020.
Monthly Burn Rate ( in 000’s)
Net monthly operating cash burn rate at the end of Q2 2020 (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 Retent ion
Annual gross dollar retention (after churn, exclusive of upsells & expansion) seen in cohorts.
Net Dol lar Retent 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 Leadership
% of female representation among employees Director-level and above.
Underrepresented Minori t ies in Leadership
% of underrepresented minority representation among employees Director-level and above.
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HOW TO READ THESE SLIDES
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719)
[N/A]
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
Rows represent common KPIs across
categories including size and growth,
financial, value drivers, and diversity
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Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719)
[N/A]
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
Columns represent distribution of
responses from companies at varying
levels of ARR, from <$1M to >$50M
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Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719)
[N/A]
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
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
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SAAS METRICS BY ARR
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (5-19)
25 (18-40)
52 (33-82)
93 (75-161)
220 (135-300) 495 (249-1054)
YoY Growth Rate
100% (12-177%) 60% (31-100%)
41% (22-84%)
46% (25-71%)
50% (18-75%)
21% (14-40%)
F I N A N C I A L
Sales & Market ing Spend
20% (13-37%)
30% (21-41%)
30% (20-41%)
35% (19-56%)
31% (20-40%)
29% (10-46%)
R&D Spend
68% (33-80%)
40% (30-60%)
32% (22-45%)
28% (20-40%)
27% (10-32%)
22% (10-30%)
Gross Margins
67% (23-80%)
75% (56-85%)
78% (70-85%)
79% (66-84%)
79% (72-84%)
75% (63-79%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$50 ($0-175)
$175 ($0-375)
$200 ($0-500)
$375 ($13-1,719) $0 ($0-375)
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (3-11)
10 (5-15)
11 (8-15)
11 (11-15)
15 (11-30)
15 (11-21)
Gross Dol lar Retent ion
90% (55-95%)
90% (59-95%)
90% (85-97%)
87% (80-93%)
87% (80-95%)
90% (86-95%)
Net Dol lar Retent ion
99% (70-110%)
100% (82-105%)
103% (92-111%)
102% (92-110%)
105% (97-113%) 105% (96-111%)
D I V E R S I T Y
Women in Leadership
10% (0-33%)
20% (3-49%)
25% (19-34%)
29% (13-40%)
20% (10-30%)
15% (10-20%)
Underrepresented Minori t ies in Leadership
10% (0-25%)
0% (0-0%)
0% (0-20%)
0% (0-25%)
0% (0-20%)
0% (0-20%)
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SAAS METRICS BY ARR (2020 vs. 2019)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
<$1M
$1-2.5M
$2.5M-10M $10-20M
$20-50M
>$50M
S I Z E A N D G R O W T H
Employees
10 (↑ 2)
25 (0)
52 (↑ 5)
93 (↓ 7)
220 (↑ 40)
495 (↓ 60)
YoY Growth Rate
100% (↑ 20%)
60% (↓ 20%)
41% (↓ 9%)
46% (↓ 4%)
50% (↓ 10%)
21% (↓ 8%)
F I N A N C I A L
Sales & Market ing Spend
20% (↓ 10%)
30% (0%)
30% (↓ 5%)
35% (↓ 5%)
31% (↓ 11%)
29% (↓ 9%)
R&D Spend
68% (↑ 18%)
40% (↓ 8%)
32% (↑ 2%)
28% (↓ 2%)
27% (↓ 3%)
22% (↑ 2%)
Gross Margins
67% (↓ 3%)
75% (↑ 2%)
78% (↓ 2%)
79% (↑ 4%)
79% (↑ 4%)
75% (0%)
Monthly Burn Rate ($ in 000s)
$50 ($0)
$50 ($0)
$175 ($0)
$200 (↓ $175)
$375 ($0)
$0 (↓ $50)
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (↑ 3)
10 (↑ 2)
11 (0)
11 (↓ 4)
15 (0)
15 (0)
Gross Dol lar Retent ion
90% (0%)
90% (0%)
90% (0%)
87% (↓ 1%)
87% (↓ 2%)
90% (↑ 2%)
Net Dol lar Retent ion
99% (↓ 1%)
100% (0%)
103% (↑ 3%)
102% (↑ 7%)
105% (↑ 3%)
105% (↑ 8%)
D I V E R S I T Y
Women in Leadership
10% (0%)
20% (-5%)
25% (+5%)
29% (+4%)
20% (-5%)
15% (-14%)
Underrepresented Minori t ies in Leadership
10% (N/A)
0% (N/A)
0% (N/A)
0% (N/A)
0% (N/A)
0% (N/A)
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SAAS 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
16 (8-27)
46 (25-88)
109 (53-195)
120 (74-196)
272 (173-557)
Funding
$3M ($0.5-3M)
$8M ($8-15M)
$28M ($15-43M)
$43M ($28 -63M)
$88M ($43-100M)
Annual Recurr ing Revenue (ARR)
$2M ($0.5-2M)
$6M ($2-6M)
$15M ($6-15M)
$15M ($6-35M)
$50M ($35-50M)
YoY Growth Rate
60% (26-100%)
60% (30-105%)
44% (27-74%)
35% (14-64%)
27% (19-50%)
F I N A N C I A L
Sales & Market ing Spend
25% (13-40%)
30% (20-44%)
40% (26-60%)
31% (20-43%)
37% (20-47%)
R&D Spend
50% (30-80%)
30% (20-50%)
30% (23-44%)
29% (15-35%)
29% (12-40%)
Gross Margins
76% (40-85%)
75% (62-86%)
75% (67-85%)
75% (63-81%)
78% (73-81%)
Monthly Burn Rate ($ in 000s)
$50 ($0-175)
$175 ($50-375)
$375 ($50-625)
$375 ($50-750)
$375 ($0-1,531)
S A A S V A L U E D R I V E R S
CAC Payback (months)
8 (5-14)
11 (8-15)
15 (11-15)
13 (11-21)
15 (11-28)
Gross Dol lar Retent ion
90% (78-95%)
90% (76-96%)
90% (80-96%)
86% (79-90%)
90% (83-96%)
Net Dol lar Retent ion
100% (87-110%)
103% (91-113%)
103 (98-112%)
103% (92-110%)
105% (96-113%)
D I V E R S I T Y
Women in Leadership
23% (0-38%)
22% (6-38%)
25% (15-40%)
28% (11-36%)
16% (10-36%)
Underrepresented Minori t ies in Leadership
0% (0-29%)
0% (0-15%)
1% (0-10%)
3% (0-15%)
6% (0-20%)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
ENTERPRISE
SOFTWARE
IS RECESSION
PROOF
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ENTERPRISE SOFTWARE IS RECESSION PROOF
Public SaaS is more valuable than ever
before – after falling nearly 50% from
all-time-highs in March, SaaS valuations
have rallied on the back of persistent
long-term tailwinds. Plus, as investors
mature in their evaluation of B2B
markets, unit economics & defensibility,
the future price uncertainty of the assets
seems to be reduced. These factors
have created exuberance in the
market.
Despite the uncertainty of the COVID-
induced economic recession enterprise
software is largely proving to be
recession proof as enterprise digital
transformations continue.
% Change in Index
Source: Pitchbook as of 9/10/2020. 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%
50%
100%
150%
200%
SaaS
NASDAQ
S&P
1/1/20
10/30/20
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PUBLIC MARKET DEMAND FOR SAAS REMAINS ROBUST
Investor demand for public software
equities remains incredibly strong.
And the companies that are going
public in 2020 are extremely
impressive. They’re largely growing
faster and sustaining high growth
longer, growing more efficiently,
raising less capital at scale, and getting
to be on average older compared to
previous IPO cohorts.
These summary data are even more
impressive when you exclude outliers
like Zoom in 2019 and Snowflake in
2020.
Source: Pitchbook as of 9/10/2020
IPOs
Capital
TTM Financials (per S-1)
Count Age @
IPO
Raised
Revenue Growth Gross
Margin
Net Dollar
Retention
CAC
Payback
2018
16
12.2
$300.8
$168.1
39.2%
71.2%
115%
30.0
months
2019
12
11.3
$220.0
$250.3
57.7%
74.9%
131%
19.2
months
2020
11
12.9
$283.5
$155.1
51.0%
76.6%
120%
18.5
months
IPO Data
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CUSTOMER DEMAND FOR SAAS REMAINS STRONG
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Enterprise SaaS has been recession
proof and the buying environment
for software remains robust. Roughly
~2/5 of respondents to our 2020
survey reported less than a 10%
decrease in expected 2020 ARR
while ~1/5 of respondents saw no
impact to budget at all.
Even after aggressive expense cuts
and revenue reforecasts many
companies maintained aggressive
topline revenue targets.
21%
18%
34%
18%
7%
2%
No impact / positive impact 0 to -9% impact
-10 to -24% impact
-25 to -49% impact
-50 to -99% impact
N/A / impact is unknown
% Impact from COVID on Expected Budget
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SO, IT’S TIME FOR COMPANIES TO HIT THE GAS AGAIN
2018
2019
2020
Growth Rate
54%
48%
43%
Net Dollar Retention
100%
99%
102%
Payback Period 12 months
11 months
11 months
R&D Spend as % of Revenue
30%
30%
30%
Sales & Marketing Spend as %
of Revenue
40%
35%
30%
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Excludes companies <$1M ARR.
Companies reacted aggressively to COVID,
but our data suggests companies are
acquiring and retaining their customers as
efficiently as ever. They’re just not spending
nearly enough on acquisition to reach
those customers (sales & marketing
expense fell 14% YoY) who have
demonstrated they still want to invest in
digital transformation! As a result, median
growth rates have dropped from 2019.
The buying environment remains
strong, so it is time to get back to
acquiring customers… or get left
behind!
Historical SaaS Benchmarks by Year* (Median)
GO-TO-MARKET
INSIGHTS
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0%
25%
50%
75%
100%
125%
150%
175%
200%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Median
Top Quartile
GROWTH RATE BY COMPANY ARR
Growth rate is highly correlated with
SaaS valuations. Software companies
grow rapidly in their early stages – a
typical company doubles YoY and a
top quartile company nearly triples.
Except for at the very earliest stages,
growth rates have fallen vs. 2019 but
as noted, growth (likely) didn’t slow as
a result of stunted customer demand
except in the hardest hit industries (i.e.
hospitality and retail). Rather,
companies lost their confidence
investing in revenue generating
activities.
ARR Scale
Growth Rate (Annual)
2019 Median
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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SALES AND MARKETING SPEND BY ARR
Sales and marketing expenses
are normally a SaaS company’s
largest areas of spend after they
hit ~$2.5M of ARR (before which
point product & engineering
dominates).
ARR Scale
0%
10%
20%
30%
40%
50%
60%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Sales and Marketing Spend (% of ARR)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
2019 Median
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SALES AND MARKETING SPEND BY
DOMINANT SALES CHANNEL*
Best-in-class companies selling
primarily through self service
and freemium can bring sales
and marketing spend well
below 20% of ARR.
As you look to reach your
customers where they work, you
need to reach them where they
live. Leveraging an “always
open” self serve model can
drive more efficient acquisition.
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Dominant sales channel is sales channel with greatest ARR contribution per account
Dominant Sales Channel
0%
10%
20%
30%
40%
50%
60%
Self Serve
Inside
Field
Indirect
Bottom Quartile
Median
Top Quartile
Sales and Marketing Spend (% of ARR)
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DOMINANT SALES CHANNEL* BY
CUSTOMER TYPE
Inside sales is the most popular
sales channel in SaaS and is
used to reach customers of all
sizes, even very small
businesses.
Make sure sales channels are
supported by your average deal
size (do you make enough to
pay competitive sales
commissions?) and how your
customers prefer to buy.
Target Customer Type
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Dominant sales channel is sales channel with greatest ARR contribution per account
13%
9%
4%
50%
62%
50%
33%
13%
18%
32%
53%
24%
11%
14%
13%
VSB
SMB
Midmarket
Enterprise
Self Serve
Inside
Field
Indirect
Sales Channel Mix (% of ARR)
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0
5
10
15
20
25
30
35
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Top Quartile
Median
Bottom Quartile
MONTHS TO RECOVER CAC (CAC PAYBACK)
ARR Scale
CAC Payback in Months*
CAC payback lengthens when
companies achieve greater ARR scale
– watch out for worsening your go-to-
market efficiency as you grow. We’re
encouraged by this year’s CAC
payback data, which suggests
companies have adapted messaging
and are still reaching their customers
effectively.
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: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Excluded companies <$1M ARR because they don’t have enough data for predictable CAC payback..
2019 Median
PRODUCT LED
GROWTH
INSIGHTS
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WHAT IS 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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PRODUCT LED GROWTH IS YOUR
SECRET WEAPON
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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 entry prices are less
susceptible to budget cuts. In
fact, the SaaS companies in our
PLG Index trade at a nearly 50%
premium to the broader SaaS
index, proving that product led
revenue is more valuable.
% Change in Index
Source: Pitchbook as of 9/10/2020. 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%
50%
100%
150%
200%
250%
300%
PLG
SaaS
1/1/20
10/30/20
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ADOPTION OF PRODUCT LED
GROWTH STRATEGIES
Despite our best efforts at evangelizing
PLG, most companies are still
experimenting, but relatively few have
gone ‘all in’ (just 27% of respondents
report PLG being fundamental to their
business).
Free trials remain the most popular
product led growth strategy, but a free
trial is not enough to be PLG –
companies need to rally their entire
organizations – from sales, marketing,
product, engineering and success –
around product led growth strategies.
PLG
Companies
All
Companies
Free trial offering
90%
46%
In-product onboarding
71%
29%
Product analytics for decision making
69%
32%
Self-service buying experience
67%
26%
Bottoms-up sales
67%
38%
Dedicated growth resources (FTEs)
53%
28%
Freemium offering
52%
25%
Product Qualified Leads
47%
19%
Source: 2020 OpenView SaaS Metrics Survey, N=409. PLG Companies defined as those leveraging more than three of the PLG
strategies surveyed.
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PRODUCT LED GROWTH BY
TARGET CUSTOMER SEGMENT
Product led growth is especially
prevalent among companies
targeting VSB/SMB customers.
That said, 3 in 10 companies
targeting large enterprises also
employ PLG tactics – PLG is for
the enterprise, too.
42%
37%
34%
27%
58%
63%
66%
73%
VSB
SMB
Midmarket
Enterprise
PLG Non-PLG
Target Segment
% of respondents
Source: 2020 OpenView SaaS Metrics Survey, N=409. PLG Companies defined as those leveraging more than three of the PLG
strategies surveyed.
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PRODUCT LED GROWTH ACVs
BY ARR SCALE
85%
89%
50%
50%
62%
33%
15%
11%
36%
43%
13%
22%
14%
7%
25%
45%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
<$25k
$25-100k
>$100k
% of respondents
Source: 2020 OpenView SaaS Metrics Survey, N=409. 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.
These companies can be much less
specific in their ideal customer
profile as they search for product
market fit, and over time target high
value customers specifically and
more efficiently.
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0%
20%
40%
60%
80%
100%
120%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
PLG
Non-PLG
PRODUCT LED BUSINESSES
GROW FASTER AT SCALE
PLG companies grow slowly in the
very early days, as it takes time to
build a community of free users and
convert those users to paying
customers.
After $10M in ARR, the magic of
PLG kicks in and these companies
can scale faster. They aren’t as
limited by their ability to hire,
onboard and feed leads to
enterprise sales reps and they’ve
built up significant goodwill from
their users.
ARR Scale
Median Growth Rate
Source: 2020 OpenView SaaS Metrics Survey, N=409. PLG Companies defined as those leveraging more than three of the PLG
strategies surveyed.
FINANCIAL &
OPERATING
INSIGHTS
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GROSS MARGIN 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.
15%
14%
16%
15%
19%
11%
10%
<50% 50 to 70% 70 to 75% 75 to 80% 80 to 85% 85 to 90% >90%
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Gross Margin on Subscription Revenue Distribution
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GROSS DOLLAR RETENTION RATES
12%
4%
6%
25%
53%
<60%
60 to 70%
70 to 80%
80 to 90%
>90%
Gross Dollar Retention Rates (Annual)
Top tier gross retention rates are
consistent (~85-90%) regardless
of last round or ARR scale.
Similarly, these rates are
consistent regardless of bull or
bear market conditions. Across
all segments, GDR was within +-
2% from 2019 to 2020. 90%+
Gross dollar retention is now
“table stakes” in enterprise
SaaS.
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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17%
11%
11%
19%
23%
7%
6%
6%
<85%
85 to 95%
95 to 100%
100 to 105%
105 to 115%
115 to 125%
125 to 135%
>135%
NET DOLLAR RETENTION RATES
2 in 5 companies surveyed
reported net dollar retention
over 105% and 1 in 10
reported NDR over 125%.
Net dollar retention tells the
whole story about what is
happening within your customer
base and should be tracked at
the cohort level to visualize
trends over time.
Net Dollar Retention Rates (Annual)
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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NET RETENTION BY TARGET CUSTOMER TYPE
Regardless of segment, a
competitive NDR rate lies
between 100% and 110%.
However, VSB and SMB
segments introduce greater
variance. As SMBs become
smaller and smaller, net
retention can start to mimic B2C
software.
Target Customer Type
Net Dollar Retention Rates (Annual)
60%
70%
80%
90%
100%
110%
120%
VSB
SMB
Midmarket
Enterprise
Bottom Quartile
Median
Top Quartile
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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EQUITY CAPITAL RAISED BY ARR*
With the rise of VC growth funds,
mega-rounds and record-
breaking VC fund sizes as well
as PE firms diversifying strategies
in order to deploy capital,
companies have access to more
and more cash.
Even more modest companies
($10-$20M ARR) can raise large
amounts of equity capital (~2/3
have raised >$20M)
Equity Capital Raised
79%
48%
30%
7%
14%
36%
23%
10%
8%
9%
29%
17%
6%
8%
3%
16%
57%
71%
25%
7%
3%
2%
10%
24%
58%
0%
20%
40%
60%
80%
100%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
< $5M
$5-10M
$10-20M
$20-50M
>$50M
ARR Scale
Source: 2020 OpenView SaaS Metrics Survey, N=409.
Note*: Excludes companies that haven’t raised capital
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MONTHLY CASH BURN
Burn was subject to two forces.
Companies’ responses to COVID
would intuitively decrease burn.
Large amounts of investor
capital would intuitively raise it.
As both customer and investor
demand for software assets
remains strong, burn remained
consistent with last year’s report.
Source: 2020 OpenView SaaS Metrics Survey, N=409. $0 burn implies breakeven or profitable.
ARR Scale
Monthly Cash Burn ($000’s)
$0
$50
$100
$150
$200
$250
$300
$350
$400
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
2020 Median
2019 Median
TALENT
INSIGHTS
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NUMBER OF EMPLOYEES BY ARR SCALE
In the early stages, companies
have one employee for every
$100,000 in ARR. As companies
scale to $20M, that figure jumps
to $150,000. Best-in-class is
$200,000+.
On average, 35% of employees
are in Engineering and another
20% are in Sales. The next
largest functions are Product
(12%) and Customer Success
(11%).
ARR Scale
0
200
400
600
800
1000
1200
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Bottom Quartile
Median
Top Quartile
Number of Employees
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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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 Engineering tends to
be the main tradeoff as companies
scale – once the product is built,
commercial activities take priority.
FTE Mix by Function
45%
30%
33%
31%
32%
27%
13%
13%
12%
11%
10%
13%
9%
10%
10%
9%
10%
10%
12%
19%
17%
21%
22%
21%
9%
14%
12%
12%
11%
11%
12%
15%
15%
16%
16%
18%
<$1M
$1-2.5M
$2.5-10M
$10-20M
$20-50M
>$50M
Engineering
Product
Marketing
Sales
Customer Success
Other
ARR Scale
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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MIX OF EMPLOYEES BY FUNCTION,
BY DOMINANT SALES CHANNEL
Companies leveraging self
service or freemium channels
commit a greater proportion of
their resources to engineering
and product – this is particularly
evident in PLG companies who
rely on organic strategies and
product awareness to drive
inbound demand.
32%
35%
34%
39%
12%
11%
12%
18%
8%
9%
10%
17%
17%
18%
20%
8%
10%
12%
12%
7%
21%
14%
13%
12%
Indirect
Field
Inside
Self Serve
Engineering
Product
Marketing
Sales
Customer Success
Other
FTE Mix by Function
ARR Scale
Source: 2020 OpenView SaaS Metrics Survey, N=409.
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FEMALE-LED TEAMS PERFORM BETTER, BUT
RAISE LESS CAPITAL
While female-led teams
outperform their peers (faster
growth), they are doing so with
far less equity capital ($8M vs.
$15M).
Although diversity has been a
trend in this report for years, it’s
important to remember you
can’t just talk the talk and work
still needs to be done.
46%
43%
$8M
$15M
$0M
$18M
40%
50%
50% or more female
Less than 50% female
Median Growth Rate
Median Equity Capital
Growth Rate (Annual)Equity Capital RaisedSource: 2020 OpenView SaaS Metrics Survey, N=409.
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PROGRESS ON GENDER EQUALITY
Larger companies continue to fare
slightly better when it comes to
gender diversity within
management teams, and, after
stagnation in 2019, we’re seeing
slight progress.
42% of respondents had one or
more female BoD member, which is
an uptick from last year.
Meanwhile, 6% had gender parity
on the BoD and 14% had parity
among their leadership team.
2017
2018
2019
2020
1+ female BoD
member
29%
37%
38%
42%
Gender parity
in leadership
12%
13%
14%
14%
Gender parity
on BoD
4%
8%
8%
6%
Source: 2020 OpenView SaaS Metrics Survey, N=409.
ABOUT THE
AUTHORS
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SEAN FANNING
Sean supports corporate development at
OpenView, including helping the firm’s portfolio
establish strategic relationships with potential
alliance partners and acquirers, advising on and
executing M&A and capital raise transactions,
supporting portfolio exit planning activities, and
communicating trends across M&A, PE, and public
markets.
Read Sean’s weekly Capital Markets Roundup
here!
sean@ov.vc
@seandougfan
/seandfanning
Director, Corporate Development
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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.
ky le@ov.vc
@poyark
/ky le-poyar
VP of Growth
KYLE POYAR
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Dan works with OpenView’s portfolio companies to
achieve and sustain best-in-class growth. He’s
supported OpenView’s Growth, Capital Markets,
and Investment teams to work with the world’s best
expansion stage software companies.
kn ight@ov.vc
@danknightnews1
/dan-c-kn ight
DAN KNIGHT
Analyst, Growth Team
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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 EXPANSION STAGE SOFTWARE VC
THANK
YOU