For Software-as-a-Service (SaaS) entrepreneurs in the early days of the multi-year journey, one common question is “are we growing fast enough?” Fast enough is a relative term but there’s been enough success stories to know when something is doing well. At Pardot, year one was building the product (2007), year two we ended at ~$600,000 ARR, year three we ended at ~$2M ARR, year four we ended at ~$4M ARR, and year five we ended at ~$8.5M ARR growing super fast (more Pardot early years revenue info).
Here are a few growth benchmarks for SaaS startups early on:
- 0 to $1M in ARR in the first 12 months from launch (from Fundraise Like a Pro Using this Internal SaaS Metrics Playbook)
- $1M to $10M ARR in five quarters or less (from The Top 10 Mistakes First Time SaaS Founders Make)
- Another one I’ve heard:
- 0 to $100,000 in ARR in six months from start of company (includes product launch)
- $100,000 to $1M in ARR in 12 months
Looking at these, Pardot didn’t meet any of these (high) growth benchmarks. Two big differences: the SaaS markets are much bigger now and these growth benchmarks come from investors with the assumption that startups hitting these numbers will have raised outside capital. Regardless, to build a really big business, serious growth is needed, even in the early days.
What else? What are some other growth benchmarks for SaaS startups in the early days?
One thought on “Growth Benchmarks for SaaS Startups in the Early Days”
If you’d taken venture money perhaps growth would’ve been faster and the gross valuation on exit would have been higher. But would that have benefited founders?