Battery Ventures: VC Investments Are Way Up. But Deals Aren’t.

Battery Ventures recently put out its Software 2021 report with a ton of interesting learnings across the leaders in SaaS and Cloud.

A few top takeaways:

#1.  Battery Ventures’ data says while VC investment $$$ are on fire — they aren’t going into more startups.  Instead, more dollars are going into the break-out leaders, not more deals.  Different data sources slice this data differently, but it’s definitely interesting to see it this way.  “Venture dollars hit an all-time high, but deal count was at an eight-year low; and deals valued over $500 million accounted for 12% of software M&A transactions, a decade high.”

#2.  Revenue growth slowed in 2020 for the average public SaaS company — but accelerated for the largest ones. To 31.5% year-over-year.  An argument the top SaaS companies figure out how to grow their TAM … almost forever.  We’ve seen everyone from MongoDB to Hubspot and more accelerate as they approach and pass $1M ARR, for example.

#3.  The average SMB SaaS company has $295k in revenue per employee, and $450k in the enterprise.  An important metric we don’t look at often enough.  The top SaaS companies are all at $400k+ in revenue per employee.  Some guideposts to guide to at scale.

#4.  The growth in venture in 2020 was really all in Series D+ rounds.  A more detailed look at the above point, but the only category of venture that really grew substantially in 2020 was Series D+ rounds.

#5.  Despite the impressive growth of global SaaS, most software unicorns in 2020 were still in the U.S.  This may be changing, but it’s interesting to see the data presented this way:

#6.  $5B is the new $1B / Unicorn.  We talked about this a ways back that $3B might be the new $1B (the “rare” valuation).  But in 2020 there were 8 SaaS deals at $5B+ valuations.

#7.  Private Equity did 48+ $100m acquisitions in 2020.  PE firms have enough capital to buy as many startups as all the public SaaS companies do.  We’re seeing it live.  A bit more on this here.

Interesting ways to see the data!

 

Published on March 23, 2021

Pin It on Pinterest

Share This