SaaS Startup Growth Is Slowing Down

Have you recently experienced slowing growth at your SaaS startup? In all likelihood, you’re not alone.

See the chart below. It shows the median monthly growth rate for SaaS startups in April 2022 (dark blue circles) compared to the previous 12-month average (light blue circles).

As you can see, startup growth in April 2022 was markedly slower across the board (except for the >$1m MRR segment).

This slowing growth trend continued into May.

See the chart below for the projected median monthly growth rate for May (based on May’s month-to-date growth data).

From looking at the data, we can see that the growth slowdown is impacting the entire SaaS industry, and isn’t company-specific. Your startup isn’t alone.

Rising inflation, a cautious investment environment coupled with a slowing economy, and rising interest rates are all contributing to this slowdown.

Both B2B and B2C companies have been impacted by this slowdown. Initially, in April, as consumers felt the pain (from rising inflation), they cut down on B2C spending (lower ARPA companies)…

…but now, in May, even B2B growth (higher ARPA companies) is slowing down. 

We don’t know what the next few months hold for us.

But we do know that if you focus on your customers, and serve them well, you’ll pass this storm.

PS: NfX did a great post on navigating (and thriving) in this environment.

Growth has been slow across the board. Although, we do note that companies with MRR >$1m have been more resilient in this downturn while SaaS startups with <$10k MRR have been hit the hardest.

The charts below show you the median monthly growth rate split by MRR bands. 

As consumers felt the pain, growth initially slowed down for B2C companies i.e. those with lower ARPA. But recently, we are also seeing slowing growth in the B2B segment and startups with higher ARPAs.

The charts below show you the median monthly growth rate split by ARPA bands.

Calculation Methodology. We used anonymised and aggregated data from ChartMogul to calculate these aggregates.

Further Reading