Path to $100m of Top 140 SaaS Unicorn Businesses: “How Quickly Does a Startup Have to Grow?”

In the previous article, “Storytelling Framework for SaaS Metrics”, I pointed out ‘Year-over-year ARR Growth Rate’ is the first important indicator of SaaS Startups. According to McKinsey & Company, maintaining a high ARR growth rate, especially as a startup scales after the product-market fit, is a key factor leading to continued the successful revenue growth beyond unicorn status (more than $1Bn in corporate value).

Then you should ask the next question.

“How quickly does a startup have to grow?”

At the beginning of Sendbird in 2015, “triple, triple, double, double, double” (T2D3 for short) trended as a dominant concept representing the annual sales growth rate of a hyper-scaling startup. It described that belief that after the company has verified the initial product-market fit, it should be able to maintain the growth rate of T2D3 for the next 5 years from the point of $2~5m ARR (Annual Recurring Revenue) to reach the status of pre-IPO or IPO.

Today in the year of 2020, I have analyzed the annual ARR growth rate of 72 companies most successful SaaS companies in 2020 to understand their path to the symbolic milestone of $100m ARR. For this analysis, I had to integrate information from multiple trusted sources to complete list of 140 SaaS businesses first by their valuation, and I analyzed the financial data of 72 companies that their revenue information was publicly available. Because of the variety of sources, there is no guarantee that this information is devoid of mistakes, so if there is anything that needs to be corrected, please provide feedback through comments or email (mark@kimchihill.com).

Years to reach the first $10M ARR

According to the list, it showed that it takes an average of 4.5 years to reach 10M in ARR. Although it is not accurately expressed in the data (and also there were only handful of companies available for their full ARR trajectories up to $10M ARR), it appears that it took about two years to release the first product after the foundation, and then the momentum of reaching $10M ARR occurred in the two years afterwards. What you can see here is that the products and startups will have to endure the hardship of “death valley” at least over a period of about five years before starting to follow the meaningful growth trajectory.

Path to $100M ARR: 10-year long journey

As a result of analyzing the data of 72 companies that achieved the $ 100m ARR, it shows that 50% (36) of the companies reached $ 100M ARR at a pace between years 5 and 10. Most of these companies founded between 2000 and 2010, and the most well-known SaaS businesses that went to the public in 2019 fall within this category: CrowdStrike, Zoom, and Datadog

SaaS Businesses with hyper-scaling growth rate, which took less than five years to reach $ 100M, are list as follow:

Name	Short description	Stage	Marketcap/Valuation	Founded	Crossed $100M in	Years to $100M
Dropbox	Cloud Storage	IPO	7.72	2007	2012	5
Elastic NV	Search Product	IPO	5.94	2012	2017	5
Hortonworks	Big Data	Merged	1.54	2011	2015	4
Slack	Collaboration	IPO	12.74	2013	2017	4
Square	Mobile Payment	IPO	30.06	2009	2012	3
Pivotal Software	cloud platform hosting	Acquired	2.7	2012	2015	3

Those companies have grown with more than 170% YoY ARR growth rate to enter into $100M ARR, and it maintains such a high growth rate even after that ARR stage to sustain its success to join $1bn ARR clubs.

Your margin for error is very thin with that hyper growth mode

Even within the 100 SaaS businesses that are considered to be the most successful in terms of corporate value, there are a wide variety of different growth rates. When you want to create a top-performing startup based only on speed, the accompanying marketing and sales expenditures are inevitable, and the burn-rate can increase promptly given the characteristics of operating costs that must be executed in advance.

In addition to that cost perspective, it is important to understand that there are structural challenges that you may encounter that leave little room for mistakes in decision-making and that would be difficult to reverse in such a hyper-growing condition. There are also values ​​that are arguably more important than the growth rate if there are not many notable competition factors out there in the market; these values could be growth and stability of members, building a close relationship with your customers, etc.

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The list of top 140 SaaS businesses by their valuation/market cap

No	Name	Short description	Stage	Marketcap/ Valuation	Founded
1	Salesforce.com	Sales/Marketing CRM	IPO	161.41	1999
2	ServiceNow	IT Management	IPO	57.92	2004
3	Shopify	E-Commerce Platform	IPO	52.11	2004
4	Workday	Finance and HR Software	IPO	41.29	2005
5	Stripe	Payment processing	Pre-IPO	35	2009
6	Atlassian	Collaboration	IPO	33.3	2002
7	Square	Mobile Payment	IPO	30.06	2009
8	Veeva Systems	Healthcare software	IPO	21.74	2007
9	Zoom	Video Conferencing	IPO	20.98	2011
10	Paycom Software	HR, payroll and benefits	IPO	16.97	1998
11	Twilio	Cloud Communication Platform	IPO	16.78	2008
12	RingCentral	Cloud Communication Platform	IPO	16.25	1999
13	Okta	Identity and access management	IPO	16.01	2009
14	DocuSign	eSignature	IPO	13.35	2003
15	Slack	Collaboration	IPO	12.74	2013
16	CrowdStrike Holdings	Cyber security	IPO	12.61	2011
17	Snowflake	Cloud data warehouse	Pre-IPO	12.4	2012
18	Datadog	Data monitoring and analytics	IPO	12.05	2010
19	Xero	Accounting software platform	IPO	11.92	2006
20	Ultimate Software	HR Software	Acquired	11	1990
21	Coupa Software	Business Spend Management	IPO	10.97	2006
22	Zendesk	a customer service software	IPO	9.58	2007
23	MongoDB	NoSQL database program	IPO	8.87	2007
24	Alteryx	Data Analytics	IPO	8.11	1997
25	Qualtrics	Survey Platform	Acquired	8	2002
26	HubSpot	Sales/Marketing CRM	IPO	7.82	2006
27	Anaplan	Planning tool	IPO	7.73	2006
28	Dropbox	Cloud Storage	IPO	7.72	2007
29	Dynatrace	Application performance management	IPO	7.72	2005
30	Zscaler	information security company	IPO	7.7	2008
31	Paylocity	cloud-based payroll and HR	IPO	7.3	1997
32	Proofpoint	Cyber security	IPO	7.03	2002
33	Wix.com	Website Builder	IPO	7	2006
34	Avalara	Tax Compliance Software	IPO	6.73	2004
35	Mulesoft	API management	Acquired	6.5	2006
36	Tanium	Endpoint device cybersecurity	Pre-IPO	6.5	2007
37	Samsara	Industrial IoT	Pre-IPO	6.3	2015
38	Databricks	Data analytics	Pre-IPO	6.2	2013
39	Elastic NV	Search Product	IPO	5.94	2012
40	Medidata Solutions	Clinical Trials Software	Acquired	5.8	1999
41	athenahealth	cloud-base Healthcare Software	Acquired	5.7	1997
42	RealPage	property management software	IPO	5.46	1998
43	Plaid	Financial infrastructure	Acquired	5.3	2013
44	Smartsheet	Work Collaboration	IPO	5.24	2005
45	HashiCorp	Cloud infrastructure automation	Pre-IPO	5.1	2012
46	Confluent	Data streaming platform	Pre-IPO	5	2014
47	Veeam	Data management	Acquired	5	2006
48	j2 Global	Digital Media and Software	IPO	4.98	1995
49	Toast	Restaurant software	Pre-IPO	4.9	2012
50	Five9	Cloud contact Center	IPO	4.46	2001
51	New Relic	Application performance management	IPO	4.28	2008
52	Mailchimp	Marketing platform	Pre-IPO	4.2	2001
53	AppFolio	Property Management Software	IPO	4.19	2006
54	LogMeIn	Remote Access	IPO	4.18	2003
55	Q2 Holdings	virtual banking	IPO	4.13	2005
56	Medallia	Survey Platform	IPO	4.13	2001
57	Cornerstone OnDemand	talent experience software	IPO	3.83	1999
58	Gusto	HR, payroll and benefits	Pre-IPO	3.8	2011
59	AppDynamics	Application performance management	Acquired	3.7	2008
60	Ellie Mae	mortgage applications	Acquired	3.7	1997
61	Freshworks	Customer engagement	Pre-IPO	3.5	2010
62	Appian	Low-code development	IPO	3.42	1999
63	Everbridge	Critical event management	IPO	3.41	2002
64	Qualys	Cyber security	IPO	3.33	1999
65	Cloudera	Big Data	IPO	3.32	2008
66	Rubrik	Data management	Pre-IPO	3.3	2014
67	BlackLine	Financial close process tool	IPO	3.2	2001
68	CloudFlare	Website infrastructure and security	IPO	3.2	2009
69	Canva	Design software	Pre-IPO	3.2	2012
70	Mimecast	Email protection	IPO	3.08	2003
71	SendGrid	Cloud Communication Platform (Email)	Acquired	3	2009
72	Procore	Construction management	Pre-IPO	3	2003
73	Automattic	Publishing and ecommerce tools	Pre-IPO	3	2005
74	Netskope	Cybersecurity	Pre-IPO	3	2012
75	Pluralsight	Online Education	IPO	2.73	2004
76	Pivotal Software	cloud platform hosting	Acquired	2.7	2012
77	GitLab	DevOps	Pre-IPO	2.7	2011
78	OneTrust	Privacy management	Pre-IPO	2.7	2016
79	Celonis	Process automation	Pre-IPO	2.5	2011
80	Cohesity	Data management	Pre-IPO	2.5	2013
81	Box	Cloud storage	IPO	2.46	2005
82	Uptake	Industrial AI	Pre-IPO	2.3	2014
83	Collibra	Data intelligence	Pre-IPO	2.3	2008
84	Checkr	AI-powered background checks	Pre-IPO	2.2	2014
85	Tenable	Cyber security	IPO	2.12	2002
86	Carbon Black	Cyber security	Acquired	2.1	2002
87	C3.ai	AI and IoT software	Pre-IPO	2.1	1998
88	Instructure	Education software	Acquired	2	2008
89	WalkMe	Digital adoption platform	Pre-IPO	2	2011
90	AvidXchange	Billing software	Pre-IPO	2	2000
91	ThoughtSpot	Business intelligence	Pre-IPO	1.95	2012
92	Apptio	IT Financial Management	Acquired	1.9	2007
93	MINDBODY	Wellness software	Acquired	1.9	2001
94	InVision	Design software	Pre-IPO	1.9	2011
95	monday.com	Team management	Pre-IPO	1.9	2012
96	SurveyMonkey	Survey Platform	IPO	1.74	1999
97	Squarespace	Website builder	Pre-IPO	1.7	2003
98	Carta	Asset management	Pre-IPO	1.7	2012
99	ServiceTitan	Home servicing software	Pre-IPO	1.65	2007
100	Dataminr	Real time alerts	Pre-IPO	1.6	2009
101	AppsFlyer	Data analytics	Pre-IPO	1.6	2011
102	Adaptive Insights	Planning tool	Acquired	1.55	2003
103	Hortonworks	Big Data	Merged	1.54	2011
104	Segment	Data infrastructure	Pre-IPO	1.5	2011
105	JFrog	DevOps	Pre-IPO	1.5	2008
106	Asana	Work collaboration	Pre-IPO	1.5	2008
107	KeepTruckin	Fleet management	Pre-IPO	1.4	2013
108	Dataiku	Data science platform	Pre-IPO	1.4	2013
109	2U	Educational technology	IPO	1.38	2008
110	Intercom	Business messaging	Pre-IPO	1.3	2006
111	Yext	Business listing tool	IPO	1.27	2006
112	Airtable	Software creation	Pre-IPO	1.1	2011
113	Outreach	Sales engagement software	Pre-IPO	1.1	2012
114	Sisense	Business analytics	Pre-IPO	1	2013
115	Auth0	Identity management	Pre-IPO	1	2007
116	AppDirect	Subscription commerce platform	Pre-IPO	1	2004
117	Acquia	Digital experience platform	Acquired	1	2009
118	Seismic	Sales enablement	Pre-IPO	1	2012
119	Talkdesk	Cloud contact centers	Pre-IPO	1	2009
120	SMS Assist	Multisite property management	Pre-IPO	1	2010
121	Sumo Logic	Data analytics	Pre-IPO	1	2013
122	Riskified	Ecommerce software	Pre-IPO	1	2011
123	Blend	Lending software	Pre-IPO	1	2015
124	Icertis	Contract management	Pre-IPO	1	2011
125	Guild Education	Education software	Pre-IPO	1	2012
126	VTS	Real estate software	Pre-IPO	1	2012
127	Pendo	User insight and communication	Pre-IPO	1	1995
128	Zuora	Subscription management tool	IPO	0.99	2007
129	Weave	Business communications	Pre-IPO	0.97	2012
130	DataStax	Cloud infrastructure	Pre-IPO	0.97	2010
131	Mixpanel	Data analytics	Pre-IPO	0.87	2011
132	Braze	Messaging platform	Pre-IPO	0.85	2011
133	Amplitude	Product intelligence platform	Pre-IPO	0.85	2009
134	Grand Rounds	Healthcare software	Pre-IPO	0.75	2009
135	Welltok	Healthcare consumer activation	Pre-IPO	0.63	2011
136	Pindrop	Voice-based security	Pre-IPO	0.6	2011
137	Gainsight	Customer success management	Pre-IPO	0.6	2006
138	Fuze	Enterprise communications	Pre-IPO	0.4	2010
139	Domo	BI and visualization	IPO	0.3	2009
140	ChannelAdvisor	eCommerce Platform	IPO	0.22	2001