Jurassic Capital, a Durham growth equity firm, released its inaugural ‘B2B SaaS Benchmarks 2023 Report’ today in an effort to enhance the way it supports the Triangle ecosystem as well as their portfolio companies. [Full disclosure: both GrepBeat and Jurassic are part of parent company Colopy Ventures.]
Kevin Mosley, one of Jurassic’s two General Partners, said that the report will not only help the firm’s portfolio companies turn into “best-in-class $10 million SaaS companies,” but also extend Jurassic’s reach beyond them. Mosley and fellow General Partner Joe Colopy want to support the local startup ecosystem as a whole.
“We’re not shy about wanting to help,” he said.
Jurassic previewed the hot-off-the-presses report in a presentation to its LPs and portfolio companies Thursday night before making it public today.
Here are some of the key findings that Mosley thought were most relevant to Triangle SaaS startups:
- Growth expectations have been reset, particularly after the last four quarters (Q3 ’22-Q2 ’23).
From Q3 2022 to Q2 2023, the Annual Recurring Revenue (ARR) growth rate for equity-backed companies with ARR between $1-5M decreased from 46% to 41%, while ARR growth rate for companies between $5-20M decreased from 39% to 35%, compared to the growth rate in FY2021. In short, growth has slowed since 2021 even among high-growth startups.
- The key metric of Lifetime Value (LTV)/Customer Acquisition Cost (CAC) has dropped significantly from the “golden times” of 2020-2022.
From 2020 to 2022, LTV to CAC ratio—the lifetime value of a customer divided by the cost to acquire a new customer—was usually around 4x, especially for companies with ARR of less than $15M. This ratio has dropped recently, and is now averaging between 1.5-2X for such companies.
- For companies under $15M ARR, the voluntary attrition rate has continued to stay near 10-15% for the last decade.
Even during the “Great Resignation” period of 2020-2022, companies growing less than 10% had a voluntary attrition rate of 15%, while those growing more than 10% had a rate of 11%. Employees still very much want to be part of fast-growing startups that are on the rise.
Mosley and the rest of the Jurassic team spent their summer sifting through numerous industry reports and data, identifying key findings relevant to the “$1 to $10 million (in ARR) journey” their portfolio companies are on. The report also includes insights and opinions from the Jurassic team based on their experience building and scaling SaaS companies.
Colopy co-founded Bronto Software alongside Chaz Felix—who is a Jurassic Operating Partner—and ran the company until its acquisition by NetSuite for $200 million in 2015. Mosley is also a former Bronto employee.
“We’re trying to filter through the noise,” Mosley said, “(and) package things up in a way that is helpful for a lot of people.”
Josh Owen, CEO of Cycle Labs—which is one of Jurassic’s portfolio companies—said he found the report helpful and plans on reviewing it with his team. Among some of his personal key takeaways was the data on growth rates.
“You hear stories of these companies that are doubling year-over-year (YoY) and you expect that success needs to look like that,” he wrote in an email to GrepBeat. “But, it’s comforting to know that on average 50% or greater ARR YoY growth can actually be very healthy.”
Sharing the report with the public is Jurassic’s way of paying it forward, Mosley said.
He added their hope is by sharing what they’ve learned, it can help more companies strive for best-in-class performance and ultimately make the entire ecosystem stronger.
Jurassic Capital will be releasing the report annually.