SaaS Growth Rate: Proven Tactics to Accelerate Your Business

In the SaaS world, your growth rate is not optional — it is the single most important signal of product-market fit, business health, and long-term viability. Investors evaluate your SaaS growth rate, lenders underwrite against it, and acquirers pay multiples for it.

But what exactly counts as a “good” SaaS growth rate? How do you measure it? And how do the best companies accelerate it without burning through cash or giving up equity?

This guide breaks down everything SaaS founders need to know about growth rate: the formulas, the benchmarks, and the proven tactics that separate high-growth companies from the rest.

What Is SaaS Growth Rate?

SaaS growth rate measures how quickly a software-as-a-service business is expanding over a given period. While growth can be tracked across several variables — active users, customers, or bookings — revenue growth is the standard metric that founders, investors, and lenders use to evaluate a SaaS company.

For subscription businesses, growth rate is typically measured using Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR). These metrics capture the predictable, repeatable revenue that makes the SaaS model powerful — and they are the foundation for SaaS valuation multiples.

Growth rate matters because it compounds. A company growing at 10% month-over-month will more than triple its revenue in a year. A company growing at 5% month-over-month will still nearly double it. Small differences in monthly growth lead to massive differences in outcome over time.

How to Calculate SaaS Growth Rate

There are several ways to measure SaaS growth depending on the time horizon and level of precision you need.

Month-over-Month (MoM) Growth Rate

The most common formula for early-stage SaaS companies:

MoM Growth Rate = (Current Month MRR − Previous Month MRR) / Previous Month MRR × 100

Example: If your MRR grew from $50,000 in January to $55,000 in February, your MoM growth rate is ($55,000 − $50,000) / $50,000 × 100 = 10%.

Year-over-Year (YoY) Growth Rate

The standard for established SaaS companies and the metric investors reference most often:

YoY Growth Rate = (Current Year ARR − Prior Year ARR) / Prior Year ARR × 100

Example: If your ARR grew from $1.2M to $1.8M, your YoY growth rate is ($1.8M − $1.2M) / $1.2M × 100 = 50%.

Compound Monthly Growth Rate (CMGR)

CMGR smooths out month-to-month volatility and gives a more accurate picture of sustained growth:

CMGR = (Ending MRR / Beginning MRR)^(1 / Number of Months) − 1

This is especially useful when presenting growth to investors, as it accounts for uneven months and seasonal variation.

Monthly-to-Annual Growth Conversion

One of the most common mistakes founders make is confusing monthly and annualized growth rates. Here is a quick reference:

Monthly Growth	Annualized Growth
2%	27%
3%	43%
5%	80%
7%	125%
10%	214%
15%	435%
20%	792%

The formula to annualize: Annual Growth = (1 + Monthly Rate)^12 − 1. Because growth compounds, even modest monthly improvements lead to dramatic annual results.

SaaS Growth Rate Benchmarks

Benchmarks vary significantly based on company size, funding model, and market conditions. The data below draws from SaaS Capital’s annual survey of over 1,000 private B2B SaaS companies and ChartMogul’s analysis of thousands of SaaS startups.

Growth Rate by ARR Band

As companies scale, growth rates naturally decelerate. Here is what the data shows:

ARR Band	Median Growth	Top Quartile	Top Decile
Under $1M	50%+	100%+	150%+
$1M–$3M	25%	60%+	192%
$3M–$5M	20%	50%+	121%
$5M–$20M	20%	40%+	—
$20M+	25%	—	—

Sources: SaaS Capital 2024–2025 Private B2B SaaS Company Growth Rate Benchmarks (median, quartile); ChartMogul SaaS Growth Report (top decile)

The key takeaway: median growth for private SaaS companies is approximately 25% year-over-year. If you are growing faster than that, you are outperforming most of the market. If you are in the top quartile (50%+ growth) at any ARR band, you are in elite territory.

Bootstrapped vs. VC-Backed Growth Rates

One of the most persistent myths in SaaS is that venture-backed companies grow dramatically faster than bootstrapped ones. The data tells a different story.

Metric	Bootstrapped	VC-Backed
Median annual growth	23%	25%
Sales spend (relative)	Baseline	+89% more
Marketing spend (relative)	Baseline	+100% more
Time to $1M ARR (top quartile)	~24 months	~20 months

Source: SaaS Capital 2025 Bootstrapped SaaS Benchmarks; ChartMogul SaaS Growth Report

The gap in median growth is just 2 percentage points (23% vs. 25%), but VC-backed companies spend 89% more on sales and 100% more on marketing to achieve it. The best bootstrapped companies in the top quartile actually outperform the median VC-backed company — and they do it while remaining profitable and retaining full ownership.

This is why non-dilutive funding has become a popular alternative for founders who want to accelerate growth without sacrificing equity. Revenue-based financing lets bootstrapped companies invest in growth at the critical moments — hiring, marketing, product development — while keeping the efficiency advantage that makes bootstrapped SaaS so compelling.

The Odds of Reaching Key ARR Milestones

ChartMogul’s analysis of thousands of startups reveals the long odds of sustained growth:

• $1M ARR: About 50% of monetizing SaaS startups eventually reach this milestone if they stick around for 10 years
• $10M ARR: Roughly 1 in 10 startups make it here
• $25M ARR: Just 1 in 50 startups reach this threshold within 10 years

The median startup takes about 2 years and 9 months to reach $1M ARR, while top performers get there in as little as 9 months. The research also shows that later cohorts (startups launched around 2021) had the lowest likelihood of hitting $1M within three years at just 10%, while the 2023 cohort is 50% more likely to reach $1M ARR within six months of launch.

What Is a “Good” SaaS Growth Rate?

Defining “good” depends on stage, market, and what you are optimizing for. But several established frameworks offer clear guideposts.

The T2D3 Framework

The T2D3 framework (Triple, Triple, Double, Double, Double) is the gold standard for venture-scale growth. Originally popularized by Neeraj Agrawal of Battery Ventures, it maps the ideal revenue trajectory for a SaaS company from $2M ARR to $100M+ ARR:

• Year 1: $2M → $6M (triple)
• Year 2: $6M → $18M (triple)
• Year 3: $18M → $36M (double)
• Year 4: $36M → $72M (double)
• Year 5: $72M → $144M (double)

Few companies achieve this exact trajectory, but it provides a useful benchmark for what hypergrowth looks like. Companies like Slack — which reached $100M in annualized revenue in just 2.5 years — exemplify this pace. More recently, AI-native companies like Cursor have compressed this timeline even further, hitting $100M ARR in roughly 12 months.

The Rule of 40

The Rule of 40 states that a healthy SaaS company’s revenue growth rate + profit margin should equal or exceed 40%. This framework is especially relevant for companies past the hypergrowth phase, because it acknowledges the tradeoff between growth and profitability.

A company growing at 60% with -20% margins scores 40 — the same as a company growing at 20% with 20% margins. Both are considered healthy, just at different stages.

Companies that exceed the Rule of 40 consistently command higher valuation multiples. According to Wall Street Prep, the top public SaaS companies meeting this threshold trade at significantly higher EV/Revenue multiples than those that fall short.

Realistic Expectations by Stage

If you are not building for venture scale, here is what “good” looks like at each stage:

• Pre-revenue to $100K MRR: 10–20% month-over-month growth signals strong product-market fit
• $100K–$500K MRR: 5–10% month-over-month. Growth starts decelerating as you move past early adopters
• $500K–$1M+ MRR: 3–5% month-over-month (40–80% annualized). Sustainable, scalable growth
• $10M+ ARR: 20–30% year-over-year is solid. You are growing faster than most of the market

Key Factors That Drive SaaS Growth Rate

Growth rate is not a single lever — it is the output of several interconnected metrics. Understanding these drivers is essential for diagnosing growth problems and identifying where to invest.

Net Revenue Retention (NRR)

NRR measures how much revenue you retain and expand from existing customers, excluding new sales. It is arguably the most important predictor of long-term growth because it compounds automatically.

A SaaS company with 120% NRR will grow its existing revenue base by 2.5x over five years — without acquiring a single new customer. Research shows that each 1% increase in NRR translates to approximately 12% higher company value after five years. The best SaaS companies maintain NRR above 110%, with elite companies reaching 130% or higher.

Churn Rate

Churn is the silent growth killer. Even high acquisition rates cannot compensate for a leaky bucket. A 5% monthly churn rate means you lose roughly 46% of your customers each year, forcing you to replace nearly half your base just to stay flat.

Reducing churn by even a small amount has an outsized impact on growth. Studies have shown that a 5% improvement in customer retention can increase profitability by 25–95%. For a deeper look at the key SaaS metrics that influence growth, track churn alongside MRR and customer lifetime value.

Customer Acquisition Cost (CAC) Efficiency

Growth is only sustainable if the cost to acquire each customer makes economic sense. The standard benchmark is a CAC payback period of 12–18 months for B2B SaaS. If payback stretches beyond 18 months, growth is likely destroying value rather than creating it.

This is where bootstrapped companies often have a structural advantage. With VC-backed peers spending 89–100% more on sales and marketing, bootstrapped SaaS companies generate more efficient growth — every dollar spent on acquisition goes further.

Expansion Revenue

The most capital-efficient path to growth is expanding revenue from customers you already have. This includes upselling to higher tiers, cross-selling additional products, and usage-based pricing that grows with customer success.

Companies with strong expansion revenue can sustain high growth rates even as new customer acquisition becomes more expensive at scale. This is a core reason why NRR above 100% is so critical.

How Growth Rate Affects SaaS Financing and Valuation

Your growth rate is not just a vanity metric. It directly determines how much your company is worth and how much capital you can access.

Growth Rate and Valuation Multiples

Growth is the single most powerful driver of SaaS valuation. The data is clear:

• 100%+ YoY growth: 10–15x ARR valuations (early-stage)
• 50–100% YoY growth: 7–10x ARR (growth-stage)
• 20–50% YoY growth: 5–8x ARR (mature SaaS)
• Under 20% YoY growth: 3–5x ARR

As of early 2026, the average revenue multiple for 157 public SaaS companies is 6.6x, with a median of 4.0x and an average YoY growth rate of 15.4%. Companies that consistently exceed the Rule of 40 trade at a meaningful premium.

Growth Rate and Non-Dilutive Financing

For bootstrapped and capital-efficient SaaS companies, growth rate is also a key factor in qualifying for revenue-based financing. Lenders evaluate growth rate alongside churn, NRR, and customer concentration to determine funding eligibility and terms.

A SaaS company with consistent MRR growth, low churn, and strong retention is an ideal candidate for non-dilutive capital. This type of financing lets founders invest in the growth strategies that matter most — hiring, marketing, product development — without giving up equity at a stage when their company is rapidly appreciating in value.

The math is compelling: if your company is growing at 50%+ annually, every percentage point of equity you give up today will cost far more in hindsight as your valuation climbs. Non-dilutive financing lets you fund growth at its most valuable stage while retaining full ownership. Learn how Founderpath evaluates your metrics to provide fast, founder-friendly capital.

How to Improve Your SaaS Growth Rate

Improving growth rate is not about finding a single silver bullet. It requires a systematic approach across acquisition, retention, and expansion. Here are the highest-impact tactics.

1. Reduce Churn First

Before investing more in acquisition, fix your retention. Churn compounds against you the same way growth compounds for you. The highest-ROI move for most SaaS companies is not acquiring more customers but keeping the ones they already have.

Focus on onboarding (the first 90 days determine long-term retention), proactive customer success, and identifying at-risk accounts before they cancel. Target a monthly churn rate below 2% for B2B SaaS — the median for top-performing companies.

2. Build for Net Revenue Retention Above 110%

Design your pricing and product to encourage natural expansion. Usage-based pricing components, tiered plans with clear upgrade paths, and add-on products all drive NRR above 100%. When existing customers generate more revenue each year, growth becomes less dependent on the sales team bringing in new logos.

3. Invest in Content Marketing and SEO

Paid acquisition gets more expensive over time. Organic traffic compounds. SaaS companies that invest in content marketing — educational blog posts, guides, comparison pages — build a sustainable acquisition engine that reduces CAC over time and brings in leads who are already educated on the problem you solve.

4. Optimize Your Pricing

Pricing is the fastest lever for growth that most founders underutilize. Small price increases — even 5–10% — flow directly to revenue with minimal impact on churn. Research your competitors, test different packaging, and consider offering a free trial to reduce friction for new customers while demonstrating the value of your product.

5. Use Non-Dilutive Capital at the Right Moments

Growth often requires upfront investment — in hiring, marketing campaigns, or product development — before revenue catches up. This is where many bootstrapped founders hit a wall: they have the growth opportunity but not the capital to seize it.

Revenue-based financing bridges this gap. Instead of raising a priced round and diluting at a critical growth stage, founders can access capital based on their existing revenue and metrics. This lets you invest in the strategies above — reducing churn, scaling content, optimizing pricing — while keeping your equity intact.

6. Embrace Product-Led Growth

Product-led growth (PLG) — where the product itself drives acquisition, activation, and expansion — has become the dominant growth model for the most efficient B2B SaaS companies. Self-serve onboarding, freemium tiers, and viral sharing mechanics can dramatically reduce CAC while increasing the speed of adoption.

Companies like Slack, Zoom, and Notion all grew primarily through their products rather than sales teams, achieving growth rates that traditional enterprise sales models struggle to match.

SaaS Growth Rate Trends

The SaaS growth landscape has shifted significantly since the pandemic-era boom. Here is what the data shows:

• Median growth has decelerated. Private SaaS median growth dropped from roughly 30% in 2023 to 25% in 2024, continuing a decline from the highs of 2021. Public SaaS median growth has fallen to around 12–15%.
• Retention is overtaking acquisition. With CAC rising across channels, the most efficient growth now comes from expanding existing customer revenue rather than acquiring new logos. Companies with NRR above 120% are pulling ahead.
• AI-native SaaS is rewriting the playbook. AI-native startups are growing at approximately 100% median versus 23% for traditional SaaS — a 4.3x gap. Some are reaching $100M ARR in under two years, a timeline that was unimaginable five years ago.
• Bootstrapped is catching up. The growth gap between bootstrapped and VC-backed companies has narrowed to just 2 percentage points, while bootstrapped companies spend a fraction on customer acquisition. Efficient growth is the new standard.

Frequently Asked Questions

What is a good SaaS growth rate?

A good SaaS growth rate depends on company stage. For early-stage companies under $1M ARR, 50%+ annual growth is the median. For companies between $1M and $10M ARR, 20–25% annual growth is typical, with top-quartile companies exceeding 50%. For mature SaaS above $10M ARR, 20–30% annual growth is considered strong. Companies exceeding the Rule of 40 (growth rate + profit margin ≥ 40%) are generally considered high performers at any stage.

How do you calculate SaaS growth rate?

The most common formula is: Growth Rate = (Current Period Revenue − Prior Period Revenue) / Prior Period Revenue × 100. For monthly growth, use MRR values. For annual growth, use ARR. To convert monthly growth to annual, use the compound formula: (1 + Monthly Rate)^12 − 1. For example, 5% monthly growth compounds to approximately 80% annual growth.

What is the average SaaS growth rate?

The median annual growth rate for private B2B SaaS companies is approximately 25%, based on SaaS Capital’s survey of over 1,000 companies. This figure has declined from around 30% in 2023 and higher peaks during 2020–2021. Public SaaS companies have a lower median growth of roughly 12–15% year-over-year.

What growth rate do investors and lenders look for?

Venture capital investors typically look for companies growing at 2–3x year-over-year (100–200% annual growth) for Series A and beyond. For non-dilutive financing providers like Founderpath, consistent revenue growth combined with strong retention metrics (low churn, high NRR) and healthy unit economics are more important than raw growth speed. This makes non-dilutive financing accessible to efficient companies that may not fit the VC hypergrowth mold.

How does growth rate affect SaaS valuation?

Growth rate is the single strongest driver of SaaS valuation multiples. Early-stage companies growing at 100%+ typically command 10–15x ARR multiples. Growth-stage companies at 50–100% growth see 7–10x multiples. Mature companies growing 20–50% trade at 5–8x ARR. Companies that meet the Rule of 40 (growth + profit margin ≥ 40%) consistently command premium valuations.

Do bootstrapped SaaS companies grow slower than VC-backed ones?

Not significantly. Bootstrapped SaaS companies grow at a median rate of 23% annually versus 25% for VC-backed companies — a gap of just 2 percentage points. However, VC-backed companies spend 89–100% more on sales and marketing to achieve that slightly higher growth. The top quartile of bootstrapped companies frequently outperform the median VC-backed company. Non-dilutive financing options like revenue-based financing allow bootstrapped founders to accelerate growth when needed without giving up equity.

The Bottom Line

Your SaaS growth rate is the most important signal of your company’s health and potential. But chasing growth at any cost — burning through cash, diluting ownership, or neglecting unit economics — is not the path to building a durable business.

The data increasingly shows that efficient growth wins. Bootstrapped companies are achieving nearly the same growth rates as their VC-backed counterparts at a fraction of the cost. Retention-driven growth is outperforming acquisition-heavy strategies. And founders who use non-dilutive capital to fund growth at critical moments are keeping more of the value they create.

Track your growth rate alongside the SaaS KPIs that matter — churn, NRR, CAC payback — and invest in the levers that compound. That is how you build a SaaS company that grows fast and lasts.