The SaaS VC Report 2024

It’s Ryan Allis at SaasRise, the community for SaaS CEOs and founders.

Today we have The 2024 SaaS VC Report fresh off the presses. I’ve been personally writing it over the last week covering valuations, amounts invested, revenue multiples, EBITDA multiples, and my annual ranking of the Top 250 Global SaaS VCs.

Let’s jump right in to the report, which might just be the most detailed report I’ve ever written. My goal is to give you a full briefing of SaaS venture capital.

Over the last week, I crunched some serious numbers and created my annual ranking of the Top 250 Global SaaS VC Firms. My goal was to create some seriously valuable content for our SaasRise community of CEOs and founders.

This year, I did the rankings by firm AUM, investment count, and number of exits as well as by my own Power Ranking Formula. You can see my full rankings here.

Key SaaS Venture Capital Stats

But first, let’s begin with some stats that firmly demonstrate that SaaS is here to stay…

• In 2023 in software venture capital…

  • Total VC investment was an impressive $144 billion up from $28B just nine years ago in 2015. 

  • The median Series A investment was $9.5M on a $30.7M pre-money valuation

  • The median Series B investment was $20.0M on a $82.5M pre-money valuation

  • The median Series C investment was $34.0M on a $250M pre-money valuation

  • The median revenue multiple for all software venture investment rounds was 10.89x

  • There were 9,334 venture deals – up impressively from just 1,636 in 2013 – yet down from 15,048 in 2022 as capital flowed less freely due to rising interest rates.

• In 2023 there were also 2062 SaaS M&A deals, down only slightly from the record of 2157 SaaS M&A deals in 2022.
  

• As of February 2024, The total amount of assets under management by the top 250 global SaaS VCs is $871 billion.
  

• The total amount of dry powder in the top 250 global SaaS VCs is $177 billion. There is plenty of equity capital out there available for SaaS firms that are growing ARR at venture-backable rates (50%+ annually).
  

• The top three active SaaS VC firms by Total AUM are Sequoia ($85B), Tiger Global ($75B), and Shenzhen Capital Group ($66B).
  

• San Francisco is the #1 city in the world for software VC firm capital with $377B in AUM, representing 43.5% of the total AUM among the top 250 global SaaS VC firms – followed by New York City (12.6%), Beijing (11.2%), Shenzhen (8.8%).
  

• Two countries, the U.S. (66.2%) and China (23.4%) represent the large majority of the AUM for software-focused venture capital firms, followed by the UK (4.3%).

Below we show the long-term rising trend line of software VC deal count, with the low-interest rate outlier “Covid years” of 2020-2022 excluded from the trend line.

The compound annual growth rate (CAGR) of software VC deals from 2010-2023 is an impressive 25.9% per year.

Now, let’s look at total investment amounts by year in software venture capital (in billions). As you can see, there was $144 billion invested in software venture capital globally in 2023.

To put it into perspective this is $2.7 billion per week being allocated by venture capital firms into private equity purchases of software companies, a staggering figure. For $144 billion you could buy every single NFL team. That’s a lot of money for one year of capital allocation. 

We are definitely in a continually and rapidly growing industry, even if we reached a temporary peak for valuation and investment count in 2021 due to the unique circumstances of artificially cheap capital in 2020-2022. 

Let’s see how the money breaks down between Seed, Series A, Series B, Series C, and Series D-E-F+ rounds.

As the rapidly growing category of AI software is a subset of software, we expect to see major continual growth in software VC investment in 2024-2026.

Now, let’s share the rankings of the top Global SaaS VCs, ranked by investment, AUM, exits, and our combined power ranking formula.

How Software Valuations Have Changed

Venture valuations for software firms peaked in 2021/2022 and came down slightly in 2023. Here are the median valuations per round over the last eleven years. 

You can see that Series A median pre-money valuations are still holding strong at $30M. We use median to show what’s normal as the mean is too heavily weighted by the big outliers. 

Below, you can see that Series B median pre-money valuations are still holding strong at $82M after peaking at $117M in 2021 (those Covid times were crazy!).

Finally you can see that Series C median pre-money valuations are still holding strong at $250M after peaking at $325M in 2021.

The percentage of shares sold (technically speaking created newly and then sold) in venture deals has also declined over time from 24.4% per round in 2010 to 18.3% per round in 2023, with each successive round requiring usually requiring slightly less equity to be sold (23% in Series A, 19% in Series B, and 12% in Series C).

Lower down in this report, we go into median revenue multiples and EBITDA multiples as well.

Now that we’ve provided the overview, let’s jump into what everyone’s been waiting for – the SaaS VC Rankings for 2024.

The 2024 SaaS VC Rankings

To view and download our full 2024 rankings of all 250 firms, see the below Google Sheet tabs.

• Top SaaS VC Firms - Power Rankings (combines investment count, exits, & AUM)

• Top 250 SaaS VC Firms by Investment Count

• Top 250 SaaS VC Firms - By AUM

• Top 250 SaaS VC Firms - By Exits

• Top 250 SaaS VC Firms - By City

• Top 250 SaaS VC Firms - By Country

• Top 250 SaaS VC Firms - By Continent

• Top 50 SaaS VC Firms - North America

• Top 50 SaaS VC Firms - Asia

• Top 50 SaaS VC Firms - Europe

• The Top 20 SaaS VC Firms

• SaaS VC Deals By Year

• SaaS VC Dollars Invested By Year

• SaaS Valuations By Round By Year

• SaaS Revenue Multiples

• SaaS Revenue Multiples by Growth Rate

• SaaS M&A Deals By Year

Let’s get right to it. Here are the top 20 software VCs by investment count, AUM, and number of exits.

If we give equal 33% weighting to software investment count, 33% weighting to AUM, and 33% weighting to number of software exits to create a Software VC Power Ranking, the top 20 list becomes:

These 20 firms together control $521 billion and have over $88B in dry powder. Not surprisingly, 13 of the top 20 firms are based in the San Francisco Bay Area. 

Just missing the top 20 software VC power rankings this year were Redpoint Ventures, Menlo Ventures, and First Round Capital.

The Best Locations for Software VC

The top ten cities for software venture capital firm headquarters are San Francisco, NYC, Beijing, Shenzhen, London, Boston, D.C., Austin, Shanghai, and Hong Kong. Let’s see how this breaks down in terms of percentages.

Just five cities (SF, NYC, Beijing, Shenzhen, London) represent 80% of the world’s VC firm headquarters. Considering there are 512 cities in the world with over 1 million residents, it’s extraordinary that the four fifths of venture capital (based on VC fund headquarters) are the above five megacities. 

By country, the United States and China are running away with the top 2 spots for the VC Firm HQ locations, with no other country even close. It’s no surprise these two countries have the two highest GDPs in the world. 

What is the secret sauce that makes the USA and China world economic leaders? Well, these two countries being the source of 90% of the world’s software venture capital is a powerful sign that there will be continued world changing innovation for many years to come.

Which global region is winning? Well among the top 250 software VC firms globally, the AUM by region was:

As noted, my research reviewed the top 250 software VC firms by investment count, which required firms to have made at least 176 software investments to qualify for this year’s rankings, so there’s more capital in Europe, Middle East, South America, Oceania, and Africa within firms that have made 175 or fewer software investments that is not fully counted here.

That said, among the top 250 software VC firms by investment count, North America and Asia represent 90% of the world’s software venture capital – an extraordinary figure. The story of the 21st century truly is the rise of Asia – and the West’s effort to keep ahead in innovation and economic might.

The Top North American Software VCs

Here are the top 20 SaaS VCs for North America by investment count. 500 Global is leading the way, with 3,102 software investments so far.

The Top Asian Software VCs

Here are the top 20 SaaS VCs for Asia by investment count. Antler is leading the way with 890 software investments so far.

The Top European Software VCs

Here are the top 20 SaaS VCs for Europe by investment count. Enterprise Ireland is leading the way with 1509 software investments so far.

SaaS Revenue Multiples Remain Strong

Because of the compelling business model of SaaS (recurring revenue annuity streams), SaaS firms command a higher revenue multiple than most industries.

Considering that a venture-backable SaaS company is likely growing revenues at between 50%-200% per year, it’s no surprise that revenue multiples for venture-backed SaaS firms are higher than the average company. 

In 2023, we saw median venture investment revenue multiples in the 8-12x range, with a median deal at 10.89x. It’s important to keep in mind, this is for the most successful SaaS companies that are venture backable. Most SaaS firms that aren’t growing as quickly will trade at more like 2x-5x ARR.

Below, let’s look at this in chart form. It’s clear that revenue multiples peaked in 2021/2022 and then came back to Earth in 2023. Yet, they still remain high compared to a decade ago – and much higher than nearly any other industry.

Even though average SaaS revenue multiples have come down since 2021/2022, they still remain much higher than a decade ago – as the investment community has realized the staying power of recurring cloud revenue. 

According to Bessemer Venture Partners Cloud Index, the median revenue multiple of a publicly traded SaaS company is 5.98x, down from a peak of 18.43x in September 2021. It makes sense that these multiples would be lower in public companies, as the firms in their index are larger and and thus don’t grow as quickly. The average publicly traded firm in the BVP Cloud Index is growing at 20.5% annually.

We see similar data in the SEG SaaS Index, which is showing an average public company SaaS revenue multiple of 6.2x.

What Revenue Multiple to Expect For Your SaaS Firm

What revenue multiple can you expect for your SaaS firm in a venture round or at an exit? Well, it depends on how fast you’re growing. Here’s a handy chart designed to give you some rules of thumb.

Actual multiples achieved will vary of course based on gross margin, churn rates, industry subsector, EBITDA levels, and venture deal competition. 

Check out the free SEG SaaS Valuation Scorecard for the 20 Factors that go into estimating a firm’s valuation. 

SaaS EBITDA Multiples Remain Very Strong

What EBITDA multiples can you expect for your firm, once you reach profitability? 

Across a sample size of 144 SaaS M&A deals tracked by Aventis Advisors, the median 2023 EBITDA multiple was 22.4x.

Breaking this down by country, US-based SaaS companies saw a median EBITDA multiple of 31.7x in 2023.

SaaS M&A Levels Remain Near Record Highs

We’ll end this report with this positive note. While SaaS valuations may have peaked in 2021/2022, SaaS M&A activity in 2023 was the 2nd highest ever, and materially higher than 2020 or 2021. We firmly believe that SaaS is here to stay. Here’s the SaaS M&A Deal chart, using data from our friends at Software Equity Group.

Join Our Community of SaaS CEOs & Founders

Thanks for reading the SaaS VC Report 2024. We hope this article has been helpful to you. Please take a moment to learn more about SaasRise, our community for SaaS CEOs and Founders. We welcome all CEOs and Founders with $1M-$100M in ARR to join us. You can apply here.

If you enjoyed this article, apply to join our SaaS CEO/Founder community here to get even more. Read my free guide to SaaS Omnipresence if you haven’t already for more background on this process of setting up ads.

See you next week with more killer SaaS scaling content!

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About the Author: Ryan Allis is the founder of SaasRise, a community for SaaS CEOs with $1M to $100M in ARR. Ryan previously led iContact as CEO and Co-Founder to $50M ARR and a $169M exit, raised $47M in equity capital and $6M in venture debt, and earned an MBA from Harvard Business School. Today, Ryan advises B2B SaaS CEOs on scaling up and helping them prepare for nine figure exits.

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