Years and Equity Capital for a SaaS IPO?
How many years and how much equity capital raised (cash) does it take for a SaaS company to get public? Given the broad range in size of companies when they file their S-1’s, there isn’t a perfect stat for both, but I did go ahead and look at ~45 high-growth SaaS companies and pulled 1) years from founding to filing their public S-1 (proxy for IPO) and 2) how much equity capital they raised to get there.
Take a look at the chart below which has total number of years from founding to initial S-1 filing. The average is 10 years and median 9. Alteryx took 19 years but started as a different business and Salesforce did it in only 5 years. There’s also no correlation between years to IPO and ARR scale at IPO.
What about total equity capital raised? The average is $147M and median $104M. There is a wide variation between companies like Cloudera raising over $1B, and Veeva raising only $7M. Interestingly, Veeva has a market cap of almost $9B and Cloudera is at $2.3B. There’s also no correlation between years to IPO and total equity capital raised. See the chart below:
Based on this data set (a small one too), SaaS companies can expect to take around 10 years and raise over $100M in equity capital in order to get public. I expect that it takes some companies longer to find product-market fit in the early years, or the market needed to mature in a way that made their product offering more valuable — i.e. Alteryx’s self-serve analytics platform would have been harder to sell in the early 2000’s before cloud database technology became prevalent. And even though businesses today can be scaled and grow faster than ever, companies are staying private longer, so I expect the 10 years and $100M+ in equity capital stats to stay somewhat constant in years to come.
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