SaaS entrepreneurs are often told to compare their business metrics to their peers, but accurate, comparable benchmarks from private startups can be tough to find — particularly within similar industry verticals and growth stages. In the absence of real, reliable data from private SaaS businesses, founders typically look to benchmarks from more mature, publicly traded SaaS companies. Investors evaluating investment opportunities also base many of their assumptions and decisions on trends from public SaaS companies.
Lighter Capital collected four years of actual business metrics from more than 125 private B2B SaaS startups to provide both founders and investors with more useful benchmarking data.
Key Takeaways
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1. SaaS startup growth has slowed, but not for top performers
The median annual revenue growth rate was 47.25% for the entire period from 2020 to 2023. Median annual revenue was $1.1 million and the median company age was 7 years.
Median annual revenue growth in private B2B SaaS startups has fluctuated since 2020, hitting a low of 27% in 2023 – a decrease of more than 40% from the previous year — and a high of 52% in 2021.
The annual growth rate for the top 25% of private B2B SaaS businesses was significantly higher at 87.55%. Notably, the upper quartile of SaaS startups grew nearly 13% faster in 2023 than they did in 2022, deviating from the recent growth slowdown.
Annual SaaS Growth by Industry
From 2020 to 2023, median annual revenue growth was higher in some industries and lower in others.
SaaS startups in the Restaurant, Hospitality, and Leisure space grew the fastest at a rate of 72.26%, followed by SaaS startups in Healthcare at 65.56%.
SaaS startups in the HR, Legal, and Backoffice category experienced the slowest annual growth at a little over 20%, while SaaS solutions for E-commerce and Retail grew about 30% annually — 56% and 36% lower than the median benchmark, respectively.
B2B SaaS Growth Benchmarks
Annual Revenue Growth Rate
Year | Bottom 25% | Median | Mean | Top 25% |
Benchmark (2020-2023) | 23.52% | 47.25% | 57.82% | 87.55% |
2023 | 17.42% | 27.41% | 45.84% | 80.95% |
2022 | 24.17% | 41.97% | 51.58% | 71.77% |
2021 | 24.61% | 52.24% | 64.39% | 95.44% |
2020 | 14.10% | 42.79% | 45.98% | 58.02% |
2. SaaS startups are using 20% less of their revenue to cover salaries
Median salary costs as a percentage of revenue among B2B SaaS startups from 2020 to 2023 was 63.59%. It decreased a total of 19% over the last 4 years from a high of nearly 70% in 2020 to a low of 56% in 2023.
With less revenue getting eaten up by wages, SaaS startups should have more cash to reinvest into growth opportunities. Let’s give it up for the bootstrappers!
Median salary cost as a percentage of operating expenses (OPEX) has been more consistent, hovering between 55% and 52%, with a median for the entire 4-year period of 53.61%. Wages typically account for a little over half of a B2B SaaS startup’s operating expenses.
SaaS Salary Costs Benchmarking by Industry
SaaS startups in the E-commerce and Retail market have the lowest median salary metrics: 52% of revenue and 49% of OPEX. Startups in the HR, Legal, and Backoffice space had the highest median salary to revenue percentage at 77%, followed by Education SaaS at 73%. SaaS solutions for Data and Infrastructure had the highest salary to OPEX percentage at nearly 59%.
SaaS Salary Costs Benchmarking by Age
Both salary as a percentage of revenue and salary as a percentage of OPEX are higher for SaaS startups between the ages of 3 and 10 years — the time when startups make more significant investments in growth and product development.
B2B SaaS Salary Costs Benchmarking
Salary as % of Revenue
Year | Bottom 25% | Median | Mean | Top 25% |
Benchmark (2020-2023) | 89.23% | 63.59% | 73.68% | 43.60% |
2023 | 98.43% | 56.69% | 68.59% | 43.49% |
2022 | 75.13% | 62.05% | 72.93% | 45.69% |
2021 | 86.30% | 64.13% | 72.65% | 45.43% |
2020 | 113.20% | 69.79% | 75.03% | 34.88% |
Salary as % of OPEX
Year | Bottom 25% | Median | Mean | Top 25% |
Benchmark (2020-2023) | 67.65% | 53.61% | 53.01% | 40.47% |
2023 | 67.33% | 52.02% | 49.49% | 39.91% |
2022 | 69.10% | 51.98% | 52.99% | 40.65% |
2021 | 65.14% | 55.23% | 52.87% | 39.49% |
2020 | 70.71% | 55.17% | 51.40% | 39.37% |
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3. SaaS startups make 6x revenue from every dollar spent on sales and marketing
The sales and marketing (S&M) multiple shows how much revenue a company makes from every dollar spent on sales and marketing, excluding salaries. The median S&M multiple for the 4-year period was about 6x, so a startup that spent $150k on sales and marketing activities in a year typically generated $900K in annual revenue.
Most years the median S&M multiple was a little over 5x, except for 2021, which was significantly higher at over 8x.
SaaS S&M Multiples by Industry
Breaking down the median S&M multiple by industry, SaaS startups in the Data & Infrastructure vertical achieved a multiple more than twice the overall median of over 15x.
HR, Legal and Backoffice SaaS startups had the lowest median multiple over the 4-year period of 1x, most likely due to significantly higher sales and marketing costs compared to startups in other categories.
If we look at the S&M multiple for the top 25% by industry vertical a different picture emerges.
E-commerce and Retail startups outperformed the benchmark for other top-performing startups (21.62) by almost 2x (41.91). Top-performing Marketing and Sales SaaS solutions also achieved a much higher multiple (32.29).
SaaS S&M Multiples by Age
S&M multiples by company age follow a trend we’d likely expect as a new SaaS business moves through the startup lifecycle.
Younger, smaller companies invest much less in sales and marketing as they’re getting off the ground, so their multiples are higher. Multiples shrink as companies age and invest more in sales and marketing, then increase again as they mature and become more efficient. Businesses older than 10 years tend to have more competition and therefore need to invest more to defend their brand and product positioning, so it makes sense that they don’t reach S&M multiples similar to younger startups.
B2B SaaS Sales and Marketing Benchmarks
Sales & Marketing Multiple
Year | Bottom 25% | Median | Mean | Top 25% |
Benchmark (2020-2023) | 2.50 | 6.08 | 14.22 | 21.62 |
2023 | 1.69 | 5.03 | 8.50 | 14.56 |
2022 | 1.63 | 5.49 | 12.56 | 21.62 |
2021 | 2.68 | 8.34 | 17.13 | 26.71 |
2020 | 2.64 | 5.09 | 12.74 | 20.61 |
4. SaaS startup churn rates peak between years 5 and 10
Median customer churn and median revenue churn for B2B SaaS startups from 2020 to 2023 was 16.21% and 11.34%, respectively.
Prior to 2023, median churn in SaaS startups was relatively stable, aside from a spike in revenue churn in 2020 that was likely a result of the global pandemic. Median customer churn hovered around 15% and median revenue churn was about half its 2020 high (19%) in 2021 and 2022.
Macroeconomic conditions in 2023 sparked a wave of cost-cutting within businesses and it appears SaaS startups were not immune to cuts — both revenue and customer churn increased sharply from the previous year. Though customer churn hit a high of more than 20%, revenue churn in 2023 (15.17%) remained below its high from 2020.
SaaS Churn by Industry
Median customer churn for SaaS startups in the Marketing and Sales space was significantly higher than other industry verticals and the overall benchmark at 28%. Revenue churn for this cohort, however, was just above the overall benchmark (11.34%).
For an individual business, churning less revenue than customers suggests the business lost less valuable customers. Across a competitive vertical like Sales and Marketing SaaS, this trend might reveal that startups in this category acquire new customers and cycle through them at a higher rate than others.
SaaS startups in the Restaurant, Hospitality, and Leisure space churned revenue at a slightly higher rate than they churned customers. The Education vertical has some of the lowest churn rates. Compared to other metrics, though, there’s less variability in churn by industry — rates across the 4-year period are predominantly in the teens.
SaaS Churn by Age
SaaS startups 8 to 10 years old had the highest churn rates at over 20%, while startups over 10 years old had the lowest churn rates.
Once again, the trend in churn rates by company age tracks with what we’d expect as a SaaS startup moves through growth stages. Young companies acquire customers willing to experiment with new products, but as time goes on and startups work to lock in their product-market fit, evolving solutions don’t always align with those early customers’ needs. Older startups that have established product-market fit and zeroed in on their unique value should exhibit lower customer and revenue churn rates.
B2B SaaS Churn Benchmarks
Customer Churn Rate
Year | Bottom 25% | Median | Mean | Top 25% |
Benchmark (202-2023) | 27.00% | 16.21% | 20.32% | 9.07% |
2023 | 27.00% | 20.43% | 21.39% | 13.76% |
2022 | 24.00% | 15.61% | 18.34% | 8.47% |
2021 | 26.77% | 15.75% | 18.65% | 9.09% |
2020 | 25.00% | 14.45% | 19.06% | 7.45% |
Revenue Churn Rate
Year | Bottom 25% | Median | Mean | Top 25% |
Benchmark (2020-2023) | 22.75% | 11.34% | 17.01% | 6.07% |
2023 | 21.25% | 15.17% | 16.40% | 11.78% |
2022 | 18.44% | 8.00% | 14.32% | 5.85% |
2021 | 22.25% | 10.38% | 15.90% | 6.30% |
2020 | 25.00% | 19.00% | 17.88% | 5.00% |
Benchmarking Data and Definitions
The financial performance metrics in this report are calculated using actual data from more than 125 private B2B SaaS startups, recorded from 2020 to 2023 and aggregated over all 4 years. The startups are located in the United States, Canada, and Australia; they span 11 different industries.
Annual Churn: Churn calculations annualize the average monthly rate for the trailing 12 months. Annual Churn = 1 – (1 – trailing 12-month Average Churn per month) ^12, where Monthly Churn is lost Revenue (or Customer Count) divided by total Revenue generated (or total Customer Count) the prior month
Salary as % of Revenue: Salary Costs divided by Gross Revenue
Salary as % of OPEX: Salary Costs divided by Operating Expenses (OPEX), where OPEX = Revenue – (Net Operating Margin x Revenue) – Interest Expense
Sales & Marketing Multiple: This metric shows how much revenue a company makes for every dollar spent on sales and marketing, excluding salaries. Sales and marketing (S&M) ROI is revenue divided by S&M costs for the one-year period, where revenue is normalized: Annual Revenue Growth Rate x Annual Gross Revenue
YoY Growth: Year-over-year (YoY) growth is the Annual Gross Revenue Growth Rate (last 12 months)
Industry Verticals
The B2B SaaS startups in this report represent 11 different industries (shown below). Two of the industry verticals have a data set of 5 or fewer companies. The remainder range from 6 - 24 companies.
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