Early-stage SaaS startups grow the same with or without VC dollars

Summary

A new report from Capchase shows that SaaS startups with between $1 million and $15 million of ARR saw similar levels of growth, on average, over the last year regardless of whether they raised venture capital or not. The report found that VC-backed SaaS startups had 42.8% year-over-year growth while bootstrapped companies had 44% growth. Although the numbers are close, VC-backed startups spent more to achieve the same growth rate as their bootstrapped peers. The report's findings were surprising but made sense after talking to bootstrapped founders.

Q&As

AI Comments

👍 This article provides valuable insight into the efficacy of venture capital in early-stage SaaS startups. The report is backed up by credible data, which adds to its credibility and highlights the importance of bootstrapping for smaller startups.

👎 This article does not provide a comprehensive view of the efficacy of venture capital in early-stage SaaS startups, as it only looks at financials from 900 of Capchase’s early-stage startup customers located in the U.S. and Europe. As such, its findings may not be applicable to the larger startup landscape.

AI Discussion

Me: It's about the role of venture capital and whether it helps early-stage companies grow. The report found that SaaS startups with between $1 million and $15 million of ARR saw nearly identical levels of growth, on average, over the last year regardless of whether they raised venture capital. So, it looks like venture capital doesn't necessarily make a difference.

Friend: That's interesting. It kind of makes sense, though. It's not like venture capital is a magic bullet, and if you have it, you'll suddenly start growing faster.

Me: Yeah, that's true. It's also interesting to think about the implications of this for bootstrapped startups. It looks like they can compete with venture-backed startups and reach similar levels of growth without significant outside investments. That could be really encouraging for entrepreneurs who want to remain independent.

Action items

• Research the pros and cons of bootstrapping versus venture capital for early-stage SaaS startups.
• Reach out to bootstrapped founders to gain insight into their experiences.
• Analyze the financials of early-stage SaaS startups to determine the best approach for growth and scale.

Technical terms

SaaS

Software as a Service, a type of software delivery model in which software and associated data are centrally hosted on the cloud.

VC

Venture Capital, a type of private equity investment that is made into early-stage, high-potential, growth companies.

ARR

Annual Recurring Revenue, a measure of the total amount of revenue that a company can expect to receive in a given year from its subscription-based services.

Bootstrapped

A term used to describe a business that is self-funded and not reliant on outside investors.

Similar articles

0.86881125 Are rising seed-stage valuations a poisoned gift for startups?

0.8613313 ‘Graceful way out’: Investors propose some struggling founders close shop and return funding

0.85811585 Venture Capital Returns, Zipline's Mega Round & Updates from Silicon Valley

0.851896 There are still opportunities in VC firms despite a drop in funding, says 500 Global

0.8501826 10 Important Startup Lessons For Founders And CEOs