Comparing SaaS Startup Funding to Revenue

After last week’s post on 2015 Inc. 500 Software Companies, I wanted to dig in and see how funding for Software-as-a-Service (SaaS) startups compared to revenues. Here’s the data for the five fastest growing SaaS companies on the 2015 Inc. 500 list:

With this tiny sample size, there doesn’t appear to be much correlation between revenue for small, fast-growing SaaS startups and funding. What is clear is that it requires a tremendous amount of capital to grow quickly, since scaling a SaaS startup is expensive.

What else? What are some more thoughts on startup funding relative to revenue?

3 thoughts on “Comparing SaaS Startup Funding to Revenue

  1. This recent “reset” in stock prices will probably mean lower valuations on startups and better deals for investors. It’s about time.

  2. As a fundamental business guy, it’s fascinating how funding can significantly outpace revenue. Currently, this is not isolated to SAAS tech. In 3D print, Carbon 3D has already raised over $140M with NO product, and a misguided value proposition.

    An interesting study would be the accumulative success of ROI to highly funded businesses (with marginal revenue) to their future (adequate revenue AND profit for a return OR exit that provides an adequate return). I bet my $1 that it’s negative.

    Great work David!!

  3. What I would also be keen in knowing is how much of that revenue is made up of managed services versus pure technology licenses. There is an inherent risk involved for SaaS companies that are very top heavy with services revenue, see the defunct Syncapse company as an example. I realize we would never get a break down of this but it would be interesting to know the percentages.

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