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Original article
ICONIQ Growth | Scaling SaaS from $1 to $20M
ICONIQ Growth Analytics_Scaling SaaS from $1 to $20M.pdf
Key takeaway
- For entrepreneurs: Focus on consistent quarterly net new ARR velocity and high-quality logo acquisition from $1-$10M ARR, as these are key drivers for fueling growth through the $20-$25M Growth Plateau.
- For investors: Look for companies that maintain 3-4x YoY ARR growth from $1-$10M and 2-3x from $10-$20M, as these top performers are likely to resist the Growth Plateau.
Summary
ICONIQ Growth's report "Scaling SaaS from $1 to $20M" provides a comprehensive analysis of key metrics and strategies for early-stage SaaS companies. The report emphasizes the importance of balancing topline growth with operational efficiency, highlighting that year-over-year ARR growth should be the guiding principle throughout this stage. It outlines the evolution of priorities and metrics as companies scale, from focusing on new logo velocity and product investment in the early stages to understanding unit economics and burn multiple as they approach $20M ARR.
Insights
- Top-performing SaaS companies maintain 3-4x YoY ARR growth from $1-$10M and 2-3x from $10-$20M.
- Consistent quarterly net new ARR velocity is a strong indicator of product-market fit.
- From $1-$10M, focus on new logo velocity (10-20% quarterly) and high-quality logo acquisition.
- Gross dollar retention of 95-100% paired with strong new logo velocity indicates product-market fit.
- R&D should be the primary focus of OpEx from $1-$5M, with S&M increasing after $5-$10M.
- Customer expansion contributes 30-35% of new ARR as companies scale to $10M-$15M.
- Net Dollar Retention becomes more important after $10M, with top quartile companies achieving 120-130% NDR.
- Magic number becomes representative of efficiency around $10M ARR, with top quartile companies achieving 1-2x.
- Median burn multiples of 1.5-2x are common as companies scale from $10-$20M.
- Top quartile companies achieve $140-$150K ARR per FTE as they approach $20M.