Companyon SaaS Benchmarks Tool: 2020 Edition
By: Parthib Srivathsan, Co-Founder & Head of Platform
Our most popular tool from last year is back with the new data from OpenView’s 2020 Expansion SaaS Benchmarks. The tool enables founders to benchmark the most important SaaS metrics against peers to contextualize current performance, identify areas for improvement, and more confidently build forecasts.
At Companyon Ventures, we created the Platform Team to help our portfolio companies identify and implement operational best practices faster and more effectively at the early stages of their evolution. As part of our operational platform support, we generate complex analytics and financial models for our portfolio companies to gain insights from their current and projected key metrics.
We’re huge fans of OpenView Venture Partners, which recently published the 2020 Expansion SaaS Benchmarks. OpenView surveyed over 400 SaaS companies of every size and stage to attain the ranges, medians, and averages of five key SaaS metrics (below) for startups within similar Annual Recurring Revenue (ARR) brackets in a given year.
Cash burn rate
Net dollar retention
In addition, OpenView included the sales and marketing spend and R&D spend ranges, medians, and averages to provide guardrails.
I further enhanced OpenView’s data by building the accompanying 2020 SaaS Benchmarks Modeling Tool to measure the current and projected performance of our portfolio against other high-performing SaaS startups. The tool, which can be downloaded here, enables a startup to input data to derive its actual five SaaS metrics (rather than just view ranges for peers within its revenue bracket). The tool also allows a startup to integrate its metrics into its financial model.
Our follow-up work has enabled our companies to actually implement OpenView’s insights into their daily operations. The tool provides a broader, comprehensive context around a company’s growth, showing how strongly and efficiently that company is operating so that it can more confidently and accurately forecast revenue. One of our portfolio founders used the tool to better understand the growth rate he needed to secure a strong Series-A raise while another realized that she should increase sales quotas per SDR for her team to attain her forecasted revenue targets.
Five SaaS Metrics’ Significance
As OpenView explains, growth at all costs does not guarantee long-term SaaS success; instead, efficient growth balanced with strong “under the hood” metrics that act as “swim lanes” leads to profitability. If a company is growing and succeeding across the five key SaaS metrics cited above, employees and investors have more conviction in that company’s enduring valuation. On the other hand, below-average SaaS metrics motivate a company to further examine inputs that may be hurting performance.
Companyon’s SaaS Benchmarks Modeling Tool
The SaaS Benchmarks Modeling Tool operationalizes OpenView’s data in an Excel format that can be used in any Excel or Google Sheets operational or financial model. It allows a company to input 11 of its broader metrics (e.g., revenue derived from subscriptions, spending on R&D and churn rate) in order to immediately and simultaneously derive its five specific key SaaS metrics, quickly and easily capturing all of that company’s performance metrics in comparison to its peers.
How to Use The SaaS Benchmarks Modeling Tool
Tab 1 - Data Input
Input the 11 requested metrics. You should already have these metrics measured in your financial model (beyond just revenue and expenses).
Tab 2 - Data Output
Based on the inputs, The SaaS Benchmarks Modeling Tool plots a company’s performance only against peers in its revenue band.
Sometimes a metric being out of benchmark range may not signal a significant red flag. Rather, falling outside of the benchmark range should prompt you to further investigate as it may mean that your company is performing better than peers. Yet if that metric is indeed relatively poor, you should analyze inputs and prepare to defend your pro-forma metrics to potential investors.
For example, if a company’s logo retention is low but its net dollar retention is very high, its customers are churning quickly but its core customers are spending more than ever. As a result, that company’s situation is not as concerning as The SaaS Benchmarks Modeling Tool may initially indicate.
Tab 3 - OV 2020 SaaS Benchmarks (hidden)
Ignore this tab, which contains additional input data via OpenView and is included so that you can integrate The SaaS Benchmarks Modeling Tool into your financial model.
Incorporating The SaaS Benchmarks Modeling Tool into a Financial Model
Select the three tabs in The SaaS Benchmarks Modeling Tool to move them into your financial model, linking relevant cells to their corresponding 11 inputs.
If you join our mailing list, I’ll notify you when I’ve uploaded a video tutorial explaining how to integrate the tool into a financial model.
By integrating this tool with your financial model, you’ll be able to see how inputs beyond the 11 captured here can further impact performance. In addition, the integration will ensure that your metrics automatically update when you transition to a new (ideally higher) revenue bracket.
Questions? Feedback? Need Help?
I'd love to hear your feedback on the tool. If you need help generating your inputs or integrating The SaaS Benchmarks Modeling Tool into your financial model, reach out to me directly at firstname.lastname@example.org.
Parthib Srivathsan heads the Platform Team at Companyon Ventures, supporting B2B software startups into their expansion-stage by injecting decades of startup experience. The Boston-based firm leads post-seed, pre-expansion rounds in capital-efficient startups across North America that are ready to scale. Companyon’s capital and expertise help scale portfolio companies into a supersized Series A or non-dilutive growth. The firm invests in startups with $1-3M in recurring revenue aiming to scale by 2-3x in the first year with help from its growth-ops Platform Team that offers experience, tools, and playbooks used in top-performing software startups.