Dear SaaStr: How Fast Should your Monthly Growth Be from $0 to $1M ARR?
I can tell you after 30+ SaaS investments, including 5 unicorns … it doesn’t really matter how long it takes you to get to the first $1m ARR, per se. I’ve invested in start-ups that got there in 6–9 months. I’ve invested in start-ups that got there in 4 years. My first decacorn investment had no revenue at all its first 2 years, despite trying. It didn’t take off until it finally had a strong enough product.
What really matters is how fast you grow at $1m ARR. But a slow start is not the end of the world.
You can see here, it took Algolia 2 years to get to $1m ARR, 5 years to get to $20m ARR … and then 11 years to get to $200m ARR.
— Jason ✨Be Kind✨ Lemkin 🇮🇱 (@jasonlk) February 13, 2018
Growth at $1m ARR is highly predictive of the future, at least within a band. The average I’ve invested in has grown at almost 20% MoM at $1m ARR.
But — and this is important — the fastest growth at $1m ARR did not correlate to fastest growth at $10m ARR. 12%-15% MoM growth at $1m is probably “enough” to grow > 100% annually at $10m ARR, in the end.
And if you grow 100%+ at $10m ARR, and have high NRR (100%+, ideally 120%) … really you can’t be stopped, so long as you continue to recruit a great team.
Everyone in my batch of CEOs that got to $10m ARR growing even 80%, eventually got to $100m ARR.
How long it took top B2B SaaS startups to hit $1m ARR pic.twitter.com/S3GUtwJclW
— Lenny Rachitsky (@lennysan) October 24, 2023
(note: an updated SaaStr Classic answer)