Capchase “Pulse of SaaS” Report Shows SaaS Startups Remain Resilient During Economic Uncertainty

by Startacus Admin

Data from more than 500 companies reveals the core health of SaaS startups and assesses how European companies have performed relative to American counterparts.

Capchase, the leading provider of non-dilutive capital to SaaS companies, has just published its Pulse of Saas report to provide the most comprehensive view of SaaS startups’ performance following recent economic changes. It's a quite a timely publication since it's only a few weeks since the networking event for SaaS startups and professional service businesses which we held with TechIreland at SaaStock Dublin. 

• Geography: Throughout the downturn, European companies have opted to maintain their cash runways and customer retention to ensure stability, and have done so more effectively than their US counterparts. US companies have focused on revenue growth, which decreased from 70% to 51%, but stayed above European companies that saw their growth drop to 43% post-downturn. However, the top quartile companies in both geographies continued to show healthy growth (126% in US and 90% in Europe). 

• Funding: Bootstrapped companies have more experience operating in a cash-strapped environment. As a result, these companies have shown resilience because they invested in a longer runway before the downturn and spent efficiently to maintain metrics similar to their venture capital-backed counterparts. Despite the macro economic environment, bootstrapped companies continue to perform well, in particular with strong median R40 (24%) and median net margin (-20%) post-downturn (compared to R40 of -13% and -66% for venture-backed companies). Top quartile bootstrapped companies fared even better, with R40 of 91% and net margin of -4%. Across all segments, top quartile companies by performance (R40) increased their spend on customer acquisition during this time, while reducing expenditures as a percent of ARR in other areas.

• Size: In an environment where potential customers tend to drift towards more experienced players, smaller companies have struggled to thrive. Small companies fared worse than their larger counterparts across net margin, retention, runway, and expenses/ARR, and their median YoY growth has been hit - dropping from 72% pre downturn to 54% post downturn.

Miguel Fernandez, co-founder and CEO of Capchase said, “While a large part of the narrative has focused on public tech companies dropping in valuation, data from more than 500 SaaS startups we have worked with paints a different and more detailed picture of how these companies have performed over the past several months. Startups continue to benefit from the automation and use of software in various sectors, and the companies that navigate the current slowdown well have an opportunity to consolidate and capture market share from their competitors.” 

• European companies that seem to have focused on maintaining runway should seek opportunities to invest in growth and win market share.
• Venture capital-backed startups with a low R40 should focus on improving efficiency and diagnosing areas of spend with inadequate returns and reallocating spend. This should be done while continuing to maintain a strong cash runway.

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