Notorious: AI Growing Faster than SaaS
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AI Growing Faster than SaaS
Stripe CEO Patrick Collison recently shared a fascinating observation: “we analyzed the AI sector on Stripe, and found that not only are AI-native businesses being built in large numbers, but that they're actually growing meaningfully faster than the fastest-growing SaaS antecedents.”
Stripe pulled data on its 100 fastest growing AI customers and compared their revenue growth to 100 of the most promising SaaS companies from 2018. Some of Stripe’s AI customers include the hottest names in AI such as Anthropic, OpenAI, Mistral, GitHub and Midjourney.
The data found that AI startups took a median of 11 months to reach $1M of annualized revenue following first customer sale compared to nearly 15 months for the SaaS cohort.
Stripe’s Emily Sands shared a good insight that “unlike past generations of software companies, AI companies pay substantial compute costs out of the gates, so are under pressure to build monetization faster.”
Stripe also found that AI companies have been much more global in their first year or two than SaaS companies:
Thanks for reading. By way of background, I am an early-stage investor at Wing and a former founder. Please reach out to me on X @zacharydewitt or at zach@wing.vc. Some of the early-stage PLG + AI companies that I have the privilege to work with and learn from are: AirOps, Copy.ai, Deepgram, Hireguide, Slang.ai, Tango, Tome and Workmate.
Operating Benchmarks (from PLG Startups):
I will continue to update these metrics and add new metrics. Let me know what metrics you want me to add (zach@wing.vc)
Organic Traffic (as % of all website traffic):
Great: 70%
Good: 50%
Conversion rate (website → free user):
Great: 10%
Good: 5%
Activation rate (free user → activated user):
Great: 50%
Good: 30%
Paid conversion rate (free user → paid user):
Great: 10%
Good: 5%
Enterprise conversion rate (free user → enterprise plan):
Great: 4%
Good: 2%
3-month user retention (% of all users still using product after 3 months):
Great: 30%
Good: 15%
Conversion from waitlist to free user:
<1 month on waitlist: ~50%
>3 months on waitlist: 20%
For more detail on acqusition rates by channel (Organic, SEM, Social etc), please refer to this prior Notorious episode.
Financial Benchmarks (from PLG Public Companies):
Financial data as of previous business day market close.
Best-in-Class Benchmarking:
15 Highest EV/ NTM Revenue Multiples:
15 Biggest Stock Gainers (1 month):
Complete Dataset (click to zoom):
Note: TTM = Trailing Twelve Months; NTM = Next Twelve Months. Rule of 40 = TTM Revenue Growth % + FCF Margin %. GM-Adjusted CAC Payback = Change in Quarterly Revenue / (Gross Margin % * Prior Quarter Sales & Marketing Expense) * 12. Recent IPOs will have temporary “N/A”s as Wall Street Research has to wait to initiate converge.
Recent PLG + AI Financings:
Seed:
Bounti, an AI-powered platform designed to boost sales team productivity by automating repetitive tasks, has raised $16M. The round was led by Google Ventures, with participation from Floodgate, Bloomberg Beta, Haystack, Octave Ventures and MS&AD.
c/side, a security platform intended for assessing third-party scripts, has raised $6M. The round was led by Uncork Capital, with participation from Scribble Ventures, Roar Ventures, Mantis VC and Prime Set.
Chai Discovery, a multi-modal foundation model for molecular structure prediction, has raised $30M at a $150M valuation. The round was led by Thrive Capital, with participation from OpenAI and Dimension.
Convergence, a startup developing personal AI assistants that learn, adapt, and remember, has raised $11.86M at a $42.71 valuation. The round was led by Balderton Capital, with participation from Salesforce Ventures and Shopify.
DryMerge, an event-driven workflow automation engine designed to help developers automate tasks and build complex workflows, has raised $2.2M. The round was led by GarageCapital, with participation from Goodwater Capital, Ritual Capital, Breakpoint Capital and Y Combinator.
Fifth Dimension AI, an AI-powered property assistant designed for sorting through unstructured data, has raised $7M. The round was led by Speedinvest, with participation from Seedcamp and Anthemis.
Letta, an AI platform for building stateful LLM applications, has raised $10M at a $70M valuation. The round was led by Felicis and Astasia Myers, with participation from Essence Venture Capital and Sunflower Capital Partners.
Mako AI, a startup building generative AI associates for the private-equity industry, has raised $1.55M. The round was led by Khosla Ventures.
OffDeal, an AI broker platform designed for buying and selling small businesses, has raised $4.7M. The round was led by Radical Ventures, with participation from Centre Street Partners and Rebel Fund.
Protege, an AI training data platform, has raised $10M. The round was led by CRV, with participation from Bloomberg Beta, Flex Capital, Liquid 2 Ventures and SV Angel.
Ren, an AI-powered relationship intelligence platform designed to help business leaders strengthen relationships, has raised $3.5M at a $14M valuation. The round was led by JLL Spark, with participation from ZoomInfo Technologies, Camber Creek and Contour Venture Partners.
Scribenote, an AI-powered medical scribe designed to help veterinarians streamline their documentation process, has raised $8.2M. The round was led by Andreessen Horowitz, with participation from Inovia Capital and Velocity.
SplxAI, a startup which aims to identify vulnerabilities in customer service chatbots, has raised $2M. The round was led by Inovo.vc, South Central Ventures and Runtime Ventures.
Supermaven, an AI coding copilot, has raised $12M. The round was led by Bessemer Venture Partners.
Early Stage:
Distyl, a startup applying generative AI to enterprise workflows, has raised $20M. The round was funded by Millennium Technology Value Partners and Coatue.
Morph, a startup developing AI-centric infrastructure to support artificially intelligent software engineers, has raised $5.75M. The round was led by Khosla Ventures, with participation from Betaworks, Irregular Expressions, Koko Xsu and Roar Ventures.
rep.ai, a startup aiming to transform online sales interactions through AI-powered “digital twin” technology, has raised $7.5M. The round was funded by Browder Capital, Gradient Ventures and m]x[v Capital.
Vana, a decentralized platform designed to assert control over the data increasingly being used to train generative AI models, has raised $5M. The round was led by Coinbase Ventures, with participation from SCB 10X, Auros Ventures, MH Ventures, DeFiance Capital, Contango Digital Assets, GSR, BoxGroup and Symbolic Capital.
World Labs, a company that is trying to make AI technology that can understand how the three-dimensional physical world works, has raised $230M at a $1B valuation. The round was led by Radical Ventures, Andreessen Horowitz and New Enterprise Associates, with participation from AMD Ventures, Intel Capital, NVentures, Adobe Ventures, Databricks Ventures and NVIDIA.
Series A:
11x, a startup developing autonomous digital workers that automate Go-to-Market workflows, has raised $24M. The round was led by Benchmark, with participation from Quiet Capital, SV Angel, Abstract Ventures, Lux Capital, Operator Partners, Visionaries, Activant, HubSpot Ventures, Project A, 20VC, 20Growth and 20Sales.
DeepOpinion, a generative automation platform designed for creating enterprise-grade AI agent apps, has raised $12.21M. The round was led by Red River West and Alpha Intelligence Capital, with participation from Lunar Ventures and Stride.VC.
DeltaStream, a real-time stream processing platform with streaming analytics and database features, has raised $15M at a $52.4M valuation. The round was funded by New Enterprise Associates, Galaxy Interactive and Sanabil Investments.
fal, a developer focused platform for AI-generated audio, video, and images, has raised $23M. The $14M Series A was led by Kindred Ventures, with participation from Andreessen Horowitz and First Round Capital, and the $9M Seed round was led by Andreessen Horowitz, with participation from Village Global.
Fathom, an AI notetaker software designed to transcribe online meetings, has raised $17M. The round was led by Telescope Partners.
Harmonic, a mathematical reasoning engine designed to explore the frontiers of human understanding, has raised $75M at a $325M valuation. The round was led by Sequoia Capital and Blossom Capital, with participation from GreatPoint Ventures, DST Global, Rainfall Ventures, Index Ventures, TIBAS Ventures and Era Funds.
Mercor, an AI-powered hiring platform designed to streamline the hiring process for both candidates and companies, has raised $30M at a $250M valuation. The round was led by Benchmark, with participation from General Catalyst.
Nurix AI, a startup building custom AI agents for enterprise services like sales and customer support, has raised $27.5M. The round was led by General Catalyst and Accel, with participation from Meraki Labs.
Zenlytic, a self-serve business intelligence platform, has raised $9M. The round was led by M13, with participation from Bain Capital Ventures, Primary Ventures, Company Ventures, Correlation Ventures and 14 Peaks.
Series B:
Connectly.ai, a company that leverages AI to help businesses, like retailers and enterprise e-commerce leaders, sell their products and services across any messaging platform, has raised $20M at a $90M valuation. Alibaba led the round, with Unusual Ventures, Volpe Capital, RX Ventures and Falabella Ventures joining.
Jus Mundi, a multilingual AI-powered search engine designed to make international law accessible and understandable, has raised $22.16M. The round was led by Acton Capital and True Global Ventures, with participation from C4 Ventures and FJ Labs.
Orb, a company that builds and sells billing software, has raised $25M. The round was led by Mayfield, with Basecase, Greylock Partners, Menlo Ventures, Scribble Ventures, South Park Commons and Uncorrelated Ventures joining.
Raycast, a command bar software designed to assist developers to control their tools, has raised $30M. The round was led by Atomico, with participation from Atlassian Ventures, Coatue Management, WiL, Accel and Y Combinator.
Series C:
Percipient.ai, an intelligence analysis platform intended to deliver artificial intelligence products and services for national security missions, has raised $18.8M at a $322.1M valuation. The round was led by Celesta Capital.
Supabase, a Postgres-centric developer platform, has raised $80M. The round was led by Peak XV, with Avra Capital, Coatue, Felicis and Y Combinator also participating.
Superb AI, a startup developing a suite of AI training data prep and verification tools, has raised $10.12M. The round was led by Doosan Investment, and participation from KT Investment, Premier Partners, Kakao Investment, Samsung NEXT Ventures and Hyundai Motors Group.
Series E:
Glean, a company that is trying to build “Google for Work”, has raised $260M at a $4.6B valuation. The round was co-led by Altimeter Capital and DST Global, with participation from Coatue Management, SoftBank Investment Advisers, Lightspeed Ventures, Kleiner Perkins, General Catalyst, Sequoia Capital, ICONIQ Growth, IVP, Craft Ventures and Sapphire Ventures.