Growth Benchmarks

I have long wanted to make a comparison between bootstrapped and VC-backed SaaS startups in terms of revenue growth.

Unfortunately, it is super difficult to obtain reliable data on a large scale.

The only analysis I have been able to find so far is from SaaS Capital and only covers the boom times 2021/2022.

At first glance, it looks as if the graphs of both groups are quite close to each other. You could deduce that VC does not really provide the growth boost that you would expect.

On closer inspection, however, you realize that there is a clear difference - especially in lower ARR ranges.

After the peak in Q1/22 when the market started to turn, the graphs moved closer together. Especially in the initial phase up to $3M ARR - due to the fact that the growth of VC-financed companies suffered greatly.

Now ChartMogul just published its latest SaaS Growth Report which for the first time shows data on bootstrapped and VC-backed SaaS companies separately.

However, the data is not as granular and only distinguishes between SaaS with an ARR of more or less than $1M.

For early stage SaaS (<$1M ARR), previous findings by SaaS Capital are not confirmed.

In 2022, small VC-backed startups apparently grew more than 100% faster than bootstrappers throughout the year (vs. +28% according to SaaS Capital).

Early stage startups in the top quartile suffered the most (bootstrapped -77% vs. peak, VC-backed -78% vs. peak).

In higher ARR regions, the top performers were also hit harder than the broader market. This is in line with developments in the public market.

The growth difference is smaller than in the early stages, but still significant. Bootstrappers who made it beyond the $1M ARR mark appear to be more resilient to market volatility than their VC-backed peers.

Ultimately, this data is always interesting, but usually of limited significance. You can see this if you compare several sources as I did here. Lots of biases in there.

If you boil it down to the essentials, the takeaways are stating the obvious:

1. VC-backed startups grow faster than bootstrappers

2. The economic downturn affected growth of both groups

3. Bootstrappers show more consistent growth than VC-backed SaaS

But that shouldn't stop you from taking a closer look ;-)

⚠️ Disclaimer: While I strive for accuracy, errors in numbers and calculations may occur. Please verify critical information independently.

By the way, I already posted about another interesting finding of ChartMogul’s report a few days ago: