Top Quartile Startups Are Growing 58% at $10m in ARR

So Emergence Capital put together a great report here on B2B startups, “Beyond Benchmarks 2024”, with a ton of great data across 664 software startups.

One piece I loved is how 2023 growth rates compared to 2022 for Top Quartile Software Startups.

Now to be clear, and I know this is a bit brutal — “Top Quartile” isn’t in general enough to get funded by VCs. They’re looking for Top Decile, or more specifically, startups that can at least Triple Triple Double Double from $1m ARR on. They’re looking for 100% growth or better at $10m ARR. Maybe 80% if they really believe things are taking off. And certainly > 100% annual growth at $1m ARR. More on that here.

So we’re almost there!! 

2024 SaaStrEuropa.com is June 4-5 in London!

Join us for 2+ fun-filled days, great parties, 100s of braindates and workshops, 1000s of connections, and so much more!  And meet everyone from Harry Stebbings to the CEO of Gong!

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Dave Gerhardt was VP Marketing at Drift, acquired for $1B, and then Privy, acquired for $100m, and now runs a great CMO/VPM community called Exit Five.

Dave is OG SaaStr from the beginning, so we were able to have a pretty epic deep dive on marketing today, both at a senior level and a deep dive on content marketing as well:

• Why marketing should almost never report to sales
• The critical size of marketing teams today
• How to do content marketing well, and see real ROI from it
• How to make sure you are hiring the right VP of Marketing

So the #2 topic in SaaS today is probably profitability and efficiency.  #1 is AI.  But profitability is a close second.

And the message to founders is confusing. Yes, everyone has to be at least 2x as efficient as 2021, maybe more so. But … that’s not enough.  You still have to grow.  So what’s the trade-off?

I pulled up 3 recent examples from the SaaStr 5 Interesting Learning series, and interestingly, all 3 are at ~$2.5B ARR:

• SMB leader HubSpot
• Enterprise vertical SaaS leader Veeva
• And collaboration leader DropBox

This edition of the SaaStr Daily is sponsored in part by Sage

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No.  Don’t necessarily count a big customer out that hasn’t deployed … yet.  

Instead, what you should try to do is renew them, especially in the enterprise. Go help them actually deploy the software.  After all, they likely spent months evaluating it and piloting it.  And in many cases, years deciding to make a big business process change.  It takes time.  Sometimes, longer than the customer had planned.

I’ve had many customers, especially big old customers, get excited, plan and buy … and then for internal reasons, deployment just got pushed out.

Many of them never used the product at all in Year 1. Yet, almost all (several brand names) renewed!

Why?

• First, they’d already budgeted for it. So the renewal was still realistic.
• Second, they still wanted to make the business process change and had picked their vendor of choice. So why change, even if deployment was delayed?
• Third, sometimes they just got ahead of internal resources.  They didn’t end up having an internal team to deploy the app, but they still want to.

So yes, it’s a big bummer when a larger customer buys but doesn’t use.

But that may only mean … Not Yet.

“Doubling Down” is a new series where we hear from top B2B SaaS investors on their most recent activities and takes on the current market. We had a great one last time with Andrew Steele, Partner at Activant Capital. Check that out here.

This week we’re focusing on Karl Alomar, Managing Partner at M13!

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