Emergence - Beyond Benchmarks 2024

Key takeaway

For entrepreneurs: Despite challenging growth headwinds and a tough fundraising environment, generational companies are being founded and built right now, with GenAI integration becoming crucial for staying competitive.
For investors: While overall venture activity has declined, GenAI companies are attracting significant premiums in valuations and round sizes, indicating a shift in investment focus.

Summary

The "Beyond Benchmarks 2024" report by Emergence provides a comprehensive overview of the current enterprise cloud market, focusing on GenAI trends, fundraising environment, and company performance metrics. Based on data from over 600 B2B software companies, the report highlights the significant impact of GenAI on product development, pricing models, and R&D investments. It also reveals a challenging fundraising landscape, with decreased venture activity across all stages, except for GenAI companies. The report emphasizes the importance of efficient growth, customer retention, and strategic adaptation to market conditions for startups navigating this complex environment.

Insights

60% of companies leveraged GenAI in a 2023 product release
Companies building GenAI features invested $2M more in R&D on average
Native GenAI companies received 80% larger Series A and 260% larger Series B investments
US software venture activity has continued to decline since the peak in 2021
ARR growth rates decreased significantly in 2023, with growth stage companies impacted the most
Net Dollar Retention (NDR) decreased by 15 percentage points compared to previous years
Products with $10-100K Annual Contract Value (ACV) had the lowest Gross Dollar Retention
CAC Payback is highest as companies start scaling
Burn multiples decrease with scale, but increased overall in 2023
79% of companies did not change their pricing in 2023

Key takeaway

Summary

Insights

Implications