B2B SaaS Growth in 2025: 5 Lessons for B2B Startups

May 21, 2025

Introduction: The Real Story Behind B2B SaaS Growth

‍

The SaaS landscape is constantly evolving, but rarely do we get a clear picture based on reliable data. This guide dives deep into insights gathered from 2,400+ private B2B SaaS companies to reveal what's truly driving growth in today's market. While conventional wisdom often pushes founders toward chasing the latest trends, the data tells a more nuanced story that challenges many popular assumptions.

‍

Some of the most surprising findings include:

‍

Cybersecurity outperforming AI startups in growth rates since Q1 2022, contradicting the narrative that AI is the only path to hypergrowth
‍
Fixed-rate pricing dominance for smaller companies, with usage-based pricing only becoming optimal after reaching $1M ARR
‍
Accelerated growth for survivors at sub-$1M ARR companies, demonstrating how challenging market conditions have created a "survival of the fittest" scenario
‍

By the numbers, the current SaaS landscape shows:
‍

17% average growth rate across the B2B SaaS sector
‍
Significant recovery from the 14% growth rate seen in Q1 2023
‍
Surprising acceleration among sub-$1M ARR companies
‍
Outperformance by essential sectors like logistics, cybersecurity, and infrastructure
‍

Let's explore each of the five key learnings in detail to understand what's really working in SaaS growth today and how these insights can be applied to your business strategy.

‍

Learning #1: The Growth Recovery Is Real, But Different This Time

‍

The Rebound from the 2023 Slowdown

‍

The first quarter of 2023 was a period of significant concern across the SaaS industry. Growth had plummeted to an average of just 14% across thousands of B2B companies—a dramatic decline from the 20%+ rates many had grown accustomed to during the pandemic boom. However, what's happened since tells an important story about resilience in the SaaS sector.

‍

According to data from Bessemer Venture Partners' State of the Cloud 2024 Report, we've witnessed a steady climb back to 17% average growth. This recovery didn't happen overnight, and it didn't occur uniformly across all segments.

‍

In fact, the OpenView Partners SaaS Benchmarks Report shows that companies in the $10-30M ARR range saw the slowest recovery (reaching only 15.2% growth), while those above $100M ARR have rebounded to 18.7% growth rates by Q1 2024. This represents a more sustainable growth trajectory built on stronger fundamentals rather than the easy money and speculative investment that characterized the 2020-2021 period.

‍

The Changing Nature of Venture Capital

‍

The VC landscape has transformed significantly. While the total number of deals has decreased by approximately 30% compared to the 2021 peak (from 5,049 deals in Q1 2021 to 3,548 in Q1 2024 according to PitchBook data), the average deal size for quality companies has actually increased. CBInsights' State of Venture Report shows that median late-stage deal sizes are up 27% year-over-year in Q1 2024, reaching $25M compared to $19.7M in Q1 2023. This indicates a fundamental shift in investment strategy:

‍

Fewer but larger bets: VCs are concentrating capital in companies with proven product-market fit and clear paths to profitability
‍
Higher bar for funding: Early-stage companies face more stringent requirements to secure initial funding
‍
Emphasis on efficiency: Investors are prioritizing efficient growth over growth at all costs
‍
Extension rounds becoming common: Many companies are raising additional capital from existing investors to extend runway

‍

As Alex Clayton from Meritech Capital noted, "The bar has never been higher for SaaS companies seeking Series A and B funding. We're looking for efficiency metrics that would have been Series C or D requirements just two years ago."

‍

This new landscape rewards companies that can demonstrate capital efficiency and a clear path to profitability—a significant change from the "growth at all costs" mentality that dominated just a few years ago.

‍

The Emergence of Bootstrapped Success Stories

‍

Alongside the shifting VC environment, we're seeing more companies successfully growing without traditional venture funding. Notable examples include:

‍

Mailchimp: Built to $700M+ in revenue before its $12B acquisition by Intuit
‍
Basecamp: Maintained profitability and independence for over 20 years
‍
Atlassian: Bootstrapped to significant scale before eventually taking investment and going public
‍
Zapier: Grew to over $140M in ARR as a fully remote, bootstrapped company before taking its first outside investment in 2021
‍
Typeform: Built significant traction before raising venture funding, now achieving over $70M in ARR

‍

These companies demonstrate that building a sustainable business with strong unit economics can be a viable alternative to the VC-backed hypergrowth model. As Jason Lemkin of SaaStr points out, "The best SaaS companies today have optionality—they can choose to take funding when it accelerates their roadmap, not because they need it to survive."

‍

Adapting to the New Normal

‍

For SaaS founders and executives navigating this recovery, several approaches are proving effective:

‍

Building with capital efficiency in mind from day one
‍
Focusing on sustainable unit economics rather than vanity metrics
‍
Developing multiple contingency plans for various funding scenarios
‍
Investing in customer success to improve retention and expansion revenue
‍
Extending runway through carefully managed burn rates

‍

This new normal rewards companies that can achieve product-market fit efficiently and scale with disciplined growth strategies rather than unlimited capital.

‍

Learning #2: Small Companies Are The Surprise Winners

‍

The Sub-$1M ARR Acceleration Phenomenon

‍

Perhaps the most unexpected finding in the data is the acceleration among companies with less than $1M in Annual Recurring Revenue (ARR). According to KeyBanc Capital Markets' SaaS Survey, companies under $1M ARR that survived the initial market contraction are now showing median growth rates of 24.3% in Q1 2024, compared to 16.5% just a year earlier.

‍

This significantly outpaces many larger companies in the $5-10M ARR range, which are growing at an average of 19.1%.

‍

This pattern mirrors what we saw during the 2008-2009 financial crisis, where nimble startups created during the downturn ultimately thrived as conditions improved. Startup Genome's research shows that companies founded during recessions are 16.2% more likely to achieve scale if they survive the initial 18 months.

‍

The "Survival of the Fittest" Effect

‍

This phenomenon can be attributed to several factors:

‍

Higher quality bar: Only the strongest concepts and execution are getting funded or surviving on limited capital
‍
Forced efficiency: Resource constraints are driving innovation in go-to-market and product development
‍
Lower competition: Reduced startup formation has created less crowded market segments
‍
Focus on fundamentals: Early product-market fit is being built on solving real problems rather than hype
‍
Better founding teams: More experienced operators are starting companies after exits or layoffs

‍

As Tom Tunguz of Redpoint Ventures observed, "The companies starting today are leaner, more focused, and building for sustainability from day one. They're the SaaS equivalent of diamonds formed under pressure."

‍

Case Studies in Small Company Resilience

‍

Several notable examples highlight this pattern:

‍

Deel: Founded in 2019, grew through the pandemic to reach $100M ARR in just 3 years by solving the critical remote work payroll problem. Their focus on global payroll and compliance met an urgent need as remote work exploded, and they've maintained 200%+ YoY growth through 2023.
‍
Causal: Built during challenging conditions to disrupt the financial modeling space, growing rapidly by focusing on a specific pain point. The company reached $5M ARR in 2023 with just 25 employees, demonstrating remarkable efficiency with an ARR-per-employee ratio exceeding $200K.
‍
Gamma: Launched a presentation tool when in-person meetings were disappearing, but found product-market fit by solving fundamental collaboration needs. Their innovative approach has led to 15% month-over-month growth throughout 2023, reaching over 400,000 users despite competing in a crowded space dominated by established giants.
‍
Synthesia: Founded in 2017, this AI video generation platform reached $50M ARR in 2023, growing over 500% since 2021 by solving a specific pain point around video content creation costs and complexity.
‍
Retool: This internal tool building platform reached $20M+ ARR with a team of just 60, maintaining a lean approach that allowed them to stay efficient while still capturing significant market share.

‍

Strategies for Early-Stage Success

‍

For founders and leaders of sub-$1M ARR companies, the data suggests several winning approaches:

‍

Extreme focus on solving one problem exceptionally well
‍
Building direct relationships with early customers to ensure product alignment
‍
Maintaining very low burn rates until clear product-market fit is established
‍
Using constraints as innovation drivers rather than limitations
‍
Prioritizing customer success from the first users onward

‍

The high mortality rate at this stage means that those who survive are particularly well-positioned for success in the improving market conditions. As David Sacks of Craft Ventures notes, "The best founders turn constraints into advantages. Limited resources force clearer thinking about what truly matters."

‍

Learning #3: "Must-Have" Is The New "Nice-to-Have"

‍

The Sectors Showing Strongest Growth

‍

The data reveals a striking pattern in which sectors are experiencing the strongest growth. According to Bessemer Venture Partners' Cloud Index, while conventional wisdom might suggest that cutting-edge technologies like AI would lead the pack, the reality is more nuanced. The fastest-growing sectors are those providing essential infrastructure and operational capabilities:

‍

Logistics & Transportation: 24% average growth (with companies like Flexport seeing 35%+ growth in 2023)
‍
Supply Chain Management: 22% average growth (with Project44 growing ARR by 70%+ even in the challenging market)
‍
Cybersecurity: 21% average growth (with Wiz reaching $100M ARR faster than any other B2B SaaS company)
‍
Infrastructure & DevOps: 20% average growth (with Databricks crossing $1B in ARR in early 2024)

‍

By comparison, pure AI startups are averaging 18% growth—certainly strong, but not leading the pack as many might assume. This is supported by Crunchbase data, which shows funding for cybersecurity startups growing 15% year-over-year in Q1 2024, while generative AI funding fell by 3% in the same period after the initial explosion.

‍

Why "Boring" Is Beautiful in SaaS

‍

This pattern reflects a fundamental shift in buying behavior during uncertain economic times. Organizations are prioritizing tools that directly impact operational resilience, security, and efficiency over experimental or enhancement technologies.

‍

As Tomasz Tunguz of Redpoint Ventures noted, "In times of uncertainty, budgets shift from 'wants' to 'needs.' The companies selling 'needs' are seeing their markets expand despite overall budget tightening."

‍

Several factors explain this trend:

‍

Risk mitigation focus: Companies are investing heavily in preventing costly disruptions
‍
Operational efficiency pressure: Tools that demonstrably reduce costs are prioritized
‍
Compliance requirements: Regulatory pressures continue to drive spending in certain categories
‍
Supply chain resilience: After pandemic disruptions, building robust supply chains is a priority
‍
Infrastructure modernization: Technical debt accumulated during rapid pandemic transitions is being addressed

‍

The Cybersecurity Growth Story

‍

Particularly notable is the outperformance of cybersecurity companies, which have maintained strong growth rates since Q1 2022—predating and outpacing the AI boom. This reflects:

‍

Increasing frequency and cost of cyber attacks (with the average data breach now costing $4.45M according to IBM's Cost of a Data Breach Report)
‍
Growing regulatory requirements around data protection
‍
The expansion of attack surfaces due to remote work and cloud adoption
‍
Board-level focus on security as a business risk rather than just a technical concern
‍

The success of cybersecurity companies like Wiz (reaching $100M ARR in just 18 months), Lacework (achieving $100M ARR with 3x year-over-year growth), and Snyk (valued at $7.4B with continued strong growth) demonstrates this trend.

‍

As Jamin Ball of Altimeter Capital points out, "Cybersecurity isn't discretionary anymore—it's existential. That's reflected in its sustained growth through economic cycles."

‍

How to Position as "Must-Have"

‍

For SaaS companies in any sector, the data suggests clear strategies for positioning as essential rather than optional:

‍

Focus messaging on risk reduction and operational continuity
‍
Quantify the cost of inaction or status quo
‍
Build integrations with mission-critical systems
‍
Develop clear ROI frameworks that highlight efficiency gains
‍
Align sales processes with procurement paths for essential services

‍

Even companies in traditionally "nice-to-have" categories can reposition aspects of their offering to emphasize mission-critical capabilities, thereby increasing resilience during budget scrutiny.

‍

Tactical Implementation: Transforming Your Positioning to "Must-Have"

‍

Here's a detailed tactical framework for repositioning your SaaS solution as essential infrastructure:

‍

Step 1: Conduct a Value Discovery Process

‍

Complete a risk assessment with prospects to quantify exposure areas
‍
Document current workflows to identify critical bottlenecks and inefficiencies
‍
Calculate the "cost of doing nothing" in concrete financial terms
‍
Identify regulatory and compliance requirements that your solution addresses
‍
Measure time-to-value and prioritize quick wins that demonstrate immediate impact

‍

Step 2: Reframe Your Messaging Framework

‍

Shift language from "enhancement" to "protection" (e.g., "boost productivity" becomes "prevent costly downtime")
‍
Create industry-specific ROI calculators that quantify hard dollar savings
‍
Develop customer-facing risk dashboards showing real-time threat mitigation
‍
Build competitive comparison tools focused on operational reliability metrics
‍
Redesign case studies to emphasize business continuity benefits, not just improvements
‍

Step 3: Revamp Your Go-to-Market Strategy

‍

Align your sales process with procurement paths for essential services
‍
Develop relationships with Risk/Security/Compliance stakeholders in addition to traditional buyers
‍
Create a "critical use cases" program to fast-track implementation of essential features
‍
Establish an emergency response protocol for customer issues to demonstrate commitment to uptime
‍
Build an executive engagement program focused on business resilience conversations
‍

Step 4: Add Technical and Product Elements that Emphasize "Must-Have" Status
‍

Implement robust monitoring and alerting capabilities that prevent problems before they occur
‍
Add compliance and certification features that address regulatory requirements
‍
Create integrations with mission-critical systems like ERP, payment processing, or identity management
‍
Build advanced reporting dashboards focused on risk reduction metrics
‍
Develop disaster recovery capabilities that protect customer operations

‍

Companies that have successfully executed this transformation include:

‍

Okta: Evolved from convenient SSO tool to mission-critical identity infrastructure
‍
Zoom: Transformed from meeting tool to essential business continuity infrastructure during the pandemic
‍
Notion: Evolved from productivity app to mission-critical knowledge management system
‍
Monday.com: Repositioned from project management to critical workflow infrastructure

‍

Learning #4: The Pricing Model Secret Nobody Talks About

‍

Stage-Appropriate Pricing Strategies

‍

One of the most actionable insights from the data is the correlation between company size and optimal pricing models. According to research from OpenView Partners' SaaS Benchmarks, the analysis reveals a clear pattern:

‍

For Pre-$1M ARR Companies:

‍

Fixed-rate pricing models show significantly better performance (2.3x higher conversion rates)
‍
Predictable cash flow appears more valuable than optimization at this stage
‍
Simplicity in pricing reduces friction in the early product-market fit phase

‍

For Post-$1M ARR Companies:
‍

Usage-based pricing models begin to show superior growth outcomes
‍
Companies with usage-based components grow 15-20% faster on average
‍
The accumulated customer data enables more sophisticated pricing optimization

‍

ProfitWell's research (now part of Paddle) found that companies implementing usage-based pricing after reaching $2M ARR experienced 38% less churn and 25% higher LTV compared to those that continued with purely fixed models.

‍

This pattern challenges the common assumption that usage-based pricing is universally superior, suggesting instead that pricing models should evolve with company maturity.

‍

Why Fixed-Rate Works Better Early

‍

For early-stage companies, several factors make fixed-rate pricing advantageous:

‍

Cash flow predictability: Critical for managing limited runway
‍
Reduced complexity: Simplifies sales and onboarding processes
‍
Lower implementation costs: Requires less sophisticated billing infrastructure
‍
Clearer unit economics: Makes financial planning more straightforward
‍
Easier customer budget approval: Fixed costs are simpler to get approved

‍

As Patrick Campbell, founder of ProfitWell (acquired by Paddle), explains: "Early-stage companies need to optimize for closing deals and retaining customers, not extracting maximum value. Fixed pricing reduces friction when you need it most."

‍

The Usage-Based Advantage at Scale

‍

As companies grow past $1M ARR, usage-based models begin to offer distinct advantages:

‍

Natural expansion revenue: Customer growth directly translates to revenue growth
‍
Deeper alignment with customer value: Customers pay based on the value they extract
‍
Lower adoption barriers: Can offer free or low-cost entry points
‍
Better data for optimization: Usage patterns inform product development
‍
Reduced churn risk: Customers can dial down rather than cancel completely

‍

Companies like Snowflake (which uses compute credits), Twilio (API calls), and MongoDB (data processing units) have demonstrated the power of usage-based models at scale, achieving exceptional growth rates through natural expansion revenue as their customers grow.

‍

Real-World Examples of Stage-Appropriate Pricing

‍

Several companies illustrate successful pricing evolution:
‍

Datadog: Started with simpler host-based pricing before evolving to a sophisticated usage model as they scaled, increasing expansion revenue from 20% to 30% of new ARR.
‍
Slack: Began with a straightforward per-user model before adding usage elements for larger enterprises and achieved a net revenue retention rate of 125%+.
‍
HubSpot: Evolved from simple tiered pricing to more complex usage components as they expanded their platform, which contributed to their average customer value increasing by over 40% since implementation.
‍
New Relic: Successfully transformed their entire pricing model from subscription to usage-based, resulting in higher growth rates after an initial transition period.
‍
Zapier: Maintained a tiered model based on "Zaps" and tasks, allowing them to capture value as customers scale their automation needs.

‍

Tactical Implementation Guide: Evolving Your Pricing Strategy

‍

For SaaS companies looking to implement stage-appropriate pricing, here's a tactical roadmap:

‍

Phase 1: Pre-$1M ARR - Fixed-Rate Foundation

‍

Implement simple tiered pricing with 2-3 clear options (Good, Better, Best)
‍
Track usage metrics silently even if not billing on them yet
‍
Include generous limits in each tier to avoid early friction
‍
Focus on annual contracts to improve cash predictability
‍
Document value drivers by interviewing power users

‍

Phase 2: $1M-$5M ARR - Hybrid Experimentation

Identify your most predictable usage metric that correlates with customer value
‍
Introduce a soft usage component in your highest tier first
‍
Test a usage-based overage model with select customers
‍
Build proper usage monitoring dashboards for customers
‍
Implement granular tracking of usage patterns by customer segment
‍

Phase 3: $5M+ ARR - Sophisticated Usage-Based Components

‍

Segment customers by usage patterns and value derived
‍
Implement custom contracts for enterprise with usage components
‍
Build predictive billing tools to help customers forecast costs
‍
Create customer success programs focused on value realization
‍
Develop expansion paths tied directly to increased usage

‍

By following this graduated approach, companies can maintain simplicity when they need it most while evolving to capture more value as they scale and gather more customer data.

‍

Learning #5: The Future Is Hybrid Pricing

‍

Combining Fixed and Variable Components

‍

The data reveals that the most successful companies at scale are increasingly adopting hybrid pricing models that combine both fixed and usage-based elements:
‍

Platform fee (fixed) provides baseline predictability for both vendor and customer
‍
Usage components enable upside as customer value increases
‍
Tiered structure often overlays both elements for enterprise customers
‍

This approach helps capture the full spectrum of customer value while maintaining predictability for financial planning. Companies implementing hybrid pricing models show 23% higher net revenue retention on average compared to those with pure fixed or pure usage models.

‍

Architectural Components of Hybrid Pricing

‍

Successful hybrid pricing typically includes:

‍

Core platform fee: Fixed monthly/annual charge for basic access
‍
User-based components: Charges scaled to human users
‍
Consumption-based elements: Fees tied to resource utilization
‍
Feature-based tiers: Premium capabilities at higher pricing levels
‍
Success-based fees: Components tied to customer outcomes

‍

As Kyle Poyar of OpenView Partners notes, "The best pricing models grow with your customers. Hybrid pricing creates a win-win where customers start small and you both win as they succeed."

‍

Building a Pricing Roadmap

‍

For SaaS executives, the data suggests developing a clear pricing evolution strategy:

‍

Start simple with fixed pricing to remove barriers to adoption
‍
Introduce usage components as you pass $1-2M ARR
‍
Develop hybrid models as you approach $5-10M ARR
‍
Continuously refine based on customer data as you scale further
‍

This evolutionary approach allows companies to match their pricing sophistication to their organizational capabilities and market position.

‍

Conclusion: What This Means For Your B2B SaaS Startup in 2025

‍

Strategic Implications by Company Stage

‍

If You're Early Stage (Pre-$1M ARR):

‍

Stick with fixed-rate pricing to maximize predictability and reduce sales friction
‍
Focus on speed and agility over optimization—get to product-market fit quickly
‍
Target sectors with "must-have" characteristics, particularly infrastructure and security
‍
Build capital efficiency into your operations from day one
‍
Find investors who understand and believe in your sector's fundamentals

‍

If You're Scaling ($1M-$10M ARR):

Begin experimenting with usage-based components to capture expansion revenue
‍
Evaluate hybrid pricing models that maintain predictability while adding upside
‍
Invest in data capabilities to inform pricing optimization
‍
Position offering as essential to operations rather than enhancement
‍
Use cohort analysis to identify patterns that drive long-term value

‍

If You're at Scale ($10M+ ARR):

Implement sophisticated hybrid pricing if not already in place
‍
Double down on infrastructure, security, and operational aspects of your offering
‍
Develop enterprise capabilities that address mission-critical needs
‍
Focus on demonstrating and quantifying concrete value delivery
‍
Build expansion paths within existing customers

‍

The Path Forward

‍

The SaaS landscape has undoubtedly changed from the heady days of 2021, but the data reveals a resilient sector with clear patterns of success. Companies that understand these patterns—focusing on operational essentials, evolving their pricing strategically, and building with capital efficiency—are positioned to thrive despite challenging conditions.

‍

As Jason Lemkin of SaaStr summarizes: "The best SaaS companies treat constraints as design parameters, not limitations. They build to last through any environment."

‍

For founders and executives navigating today's market, these insights provide a roadmap for sustainable growth based not on conventional wisdom or hype cycles, but on the actual performance of thousands of companies across the B2B SaaS landscape.

‍

This guide is based on analysis of data from 2,400+ private B2B SaaS companies across various sectors, stages, and business models. While every business has unique characteristics, these patterns represent the most consistent success factors observed across the dataset.

‍

SOURCE: Inspired and elaborated from the article Originally published on SaaSTR.

‍

Additional Resources

‍

For those looking to dive deeper into these topics, consider exploring:

‍

SaaStr Annual Conference for insights from successful SaaS founders and executives
‍
OpenView's SaaS Benchmarks Report for detailed metrics on pricing and growth
‍
Bessemer Venture Partners' State of the Cloud Report for broader industry trends
‍
ProfitWell's Pricing Strategy Research for detailed analysis of pricing models
‍
Tomasz Tunguz's blog for data-driven insights on SaaS metrics and growth strategies
‍
KeyBanc Capital Markets' SaaS Survey for comprehensive benchmarking data
‍
ChartMogul's SaaS Metrics Refresher for understanding key performance indicators
‍
SaaS Capital's Research for funding and growth benchmarks
‍
Paddle's State of SaaS Pricing Report for pricing strategy insights