SaaStr · 2020-10-13 · 2059d

The 7-10 Year SaaS Journey: Why Building SaaS Takes a Decade

SaaS companies require significantly longer to build than consumer web businesses, typically taking 7-10 years to reach scale and 12 years on average to IPO. Founders must commit to sustained growth trajectories with realistic revenue projections, understanding that meaningful exits via M&A or IPO require substantial ARR milestones that take years to achieve.

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Metrics in this report

Annual Growth Rate (Assumed)

100%

year-over-year

baseline projection through $50m ARR

IPO ARR Threshold

500$ millions

minimum

modern SaaS IPO standard

M&A Entry ARR Threshold

10-20$ millions

minimum

for healthy acquisition exit

Product-Market Fit Timeline

24months

minimum

to minimum sellable product and $1m ARR

Time to IPO

12years

average

SaaS companies

Time to Scale (Big)

7-10years

range

to reach significant scale

Time to Scale (Initial)

5years

typical

to reach $10m ARR