Best Practices

Yes, SaaS Startup Growth Is Slowing Down. Here’s the Data

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

SaaS Growth Slowdown for the month of April

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).

SaaS Growth Slowdown for the month of May

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)…

Median Monthly Growth Rate by ARPA Band -- Apr 2022

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

Median Monthly Growth Rate by ARPA Band May 2022

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.

Appendix: Median Monthly Growth Rate by MRR Band

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. 

<$10k MRR monthly growth rate
$10k-50k MRR Monthly Growth Rate
$50k -100k MRR Median Monthly Growth Rate
$100k -250k MRR Median Monthly Growth Rate
$250k -500k MRR Median Monthly Growth Rate
$500k -1m MRR Median Monthly Growth Rate
gt 1m MRR Median Monthly Growth Rate

Median Monthly Growth Rate by ARPA Band

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.

$0 -10 ARPA Median Monthly Growth Rate
$10 -50 ARPA Median Monthly Growth Rate
$50-100 ARPA Median Monthly Growth Rate
$100 -250 ARPA Median Monthly Growth Rate
$250 -500 ARPA Median Monthly Growth Rate

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


Further Reading

Sid Jain

Senior Analyst

@heysidjain