The world of SaaS companies has undergone a significant transformation in the past year. The 2022 SaaS benchmarks report from OpenView Venture Partners reveals stark differences between this year’s data and last year’s. With 660 global respondents, this year’s sample is not drastically different from the previous one. However, the mood and sentiment have changed dramatically.
Cutting Cash Burn: A Necessary Evil
One of the most striking findings in the report is that an overwhelming majority of SaaS companies are slashing spending regardless of their cash runway. This drastic measure is a direct response to the public selloff and the resulting "whiplash" in the market. As macro concerns continue to dominate the landscape, it’s clear that this trend will persist for some time.
Founders at all stages of growth are working on extending their runway, with even more companies cutting back than OpenView expected. This shift requires a fine-tooth comb approach to make informed decisions about resource allocation and strategic bets.
The Rule of 40: A New Priority
The Rule of 40, which emphasizes the importance of balancing growth with profitability, has become a top priority for investors. This new emphasis on efficiency and balance is a significant departure from the previous focus solely on growth.
"The past year has been all about adjusting to a new reality," said Ryan Sauer, Principal at OpenView Venture Partners. "We’ve seen a shift in investor priorities, with a greater emphasis on efficiency and balance. It’s no longer just about how fast you’re growing; it’s about how sustainably you can grow."
Sales and Marketing Spend: A Telling Indicator
Interestingly, sales and marketing spend has remained relatively stable for companies with ARR below $50 million. However, OpenView anticipates that this will change as startups focus on more efficient and reliable routes to market.
Key Takeaways from the Report
- An overwhelming majority of SaaS companies are slashing spending regardless of their cash runway.
- The Rule of 40 has become a top priority for investors, emphasizing the importance of balancing growth with profitability.
- Sales and marketing spend has remained stable for companies with ARR below $50 million, but is expected to change as startups focus on more efficient routes to market.
Conclusion
The 2022 SaaS benchmarks report from OpenView Venture Partners provides a snapshot of the current state of the SaaS industry. As the landscape continues to evolve, it’s clear that companies must adapt quickly to changing investor priorities and market conditions.
By understanding these shifts and being prepared to make data-driven decisions, founders can position their businesses for long-term success in this rapidly changing environment.
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