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?