NPLG 11.2.23: Avg. Time to Find PMF and Reach $1M ARR
The best PLG founders, startups, strategies, metrics and community. Every week.
Current subscribers: 8,565, +105 since last week
Share the PLG love: please forward to colleagues and friends!
Avg. Time to Find PMF and Reach $1M ARR
I wanted to share two helpful charts and takeaways sourced from Lenny's substack based on interviews with successful B2B startup founders.
Time to PMF
The median time from idea to feeling product-market fit was roughly 2 years. Start to worry if you’ve been working on your idea for over 2 years and not feeling PMF (see below what that feels like), and start to seriously worry if it’s been over 3 years.
From a working product to feeling PMF typically took 9-18 months. Expect to spend a year or so iterating before you finally have something people want.
Most companies got an alpha product out the door in 1-3 months. Unless you think you’re the next Figma, get your V1 out quickly.
A few companies—Figma, Airtable, Slack—took 4+ years to find PMF, but they were the exceptions, and Slack was working on a completely different product (a game) before pivoting to what became Slack.
Time to $1M ARR
On average, it took top B2B startups ~2 years from founding to hit $1m ARR, and roughly 1.5 years after closing their first customer. There are exceptions, like Ramp, Linear, Census, and Zip, that got there more quickly (some within months), and also companies like Loom and Vanta that took 2+ years.
Once you’ve signed your first customer, you should strive to hit $1m ARR within 1.5 years if you want to be on pace with the top B2B companies.
Interestingly, there isn’t a large difference in timelines between companies with large ACVs (e.g. Looker, Gong, Sprig, Vanta) and low ACVs (e.g. Loom, Figma).
I would love feedback. Please hit me up on twitter @zacharydewitt or email me at zach@wing.vc. If you were forwarded this email and are interested in getting a weekly update on the best PLG companies, please join our growing community by subscribing.
PLG Tweet of the Week:
PLG Benchmarking (Startups):
I will continue to update these metrics and add new metrics. I would love your feedback on what else I should track (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 NPLG.
PLG Financial Benchmarking (Public PLG Companies):
Financial data as of previous business day market close.
Best-in-Class PLG Benchmarking:
15 Highest PLG EV / NTM Multiples:
15 Biggest PLG Stock Gainers (1 month):
Complete Notorious PLG 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 Financings (Private Companies):
Seed:
Bluebirds, a lead generator software platform designed to provide sales representatives resells to past customers, has raised $5M at a $18.35M valuation. The round was led by Lightspeed Venture Partners, with participation from Sequoia Capital, Y Combinator, Soma Capital and 1984 Ventures.
Credal, an artificial intelligence-enabled platform designed to help managers write personalized memos for each stakeholder by automatically summarizing the changes in documents, metrics, and SaaS tools, has raised $4.8M. The round was led by Spark Capital, with participation from Pioneer Fund.
Klu, an LLM app platform designed to build, evaluate and optimize GPT-4 applications, has raised $1.7M. The round was led by Firstminute Capital, with participation from Andreessen Horowitz, Sequoia Capital, Atomico, and Craft Ventures.
Layer, a custom integration platform designed to provide an application programming interface and software development kit solutions, has raised $3M. The round was led by Drive Capital, with participation from Resolute Ventures, Detroit Venture Partners, Alumni Ventures, Expansion Venture Capital and 1517 Fund.
Quickly, a developer of invoicing and payment software designed to let small and medium businesses take control of working capital, has raised $7.35M from undisclosed investors.
SkillsTrust, an artificial intelligence-based platform intended to offer skills-based hiring from the theoretical to the practical, has raised $1M. The round was led by Rethink Capital Partners, with participation from Emerge Education.
Twelve Labs, a video understanding platform that uses artificial intelligence to extract information from videos, such as movement and actions, objects and people, sound, text on screen, and speech, has raised $9.63M. The round was funded by Nvidia, Intel, Samsung NEXT Ventures and Korea Investment Partners.
Wudpecker, a knowledge management tool that uses AI to extract high-quality notes from various data sources, has raised $0.35M. The round was led by Trind Ventures, with participation from Sofokus Ventures and Accelerace.
ZenML, an open source MLOps platform designed to create production-ready machine learning pipelines, has raised $6.4M. The round was led by Crane Venture Partners and Point Nine Capital, with participation from AIX Ventures.
Series A:
Betteromics, a data analysis platform designed to collect, process, and analyze life science data, has raised $20M. The round was led by Triatomic Capital and Sofinnova Partners, with participation from SHAKTI.
Roofr, a platform offering sales tools to the roofing industry, has raised $23.5M at a $116.5M valuation. The round was led by Vertical Venture Partners, with participation from ABC Supply Company, SVB Capital, ACE & Company, Bullpen Capital, Interplay, I2BF Global Ventures, Podemsky Ventures and MGFO.
Warmly, an autonomous sales platform that provides warm leads for sales departments using metadata and intent data, has raised $11M. The round was led by Felicis, with participation from Zoom Ventures, NFX, F-Prime Capital and Maven Ventures.
Series C:
Fingerprint, a device intelligence API that helps developers build security solutions using information from hardware accessing a website, has raised $33M. The round was led by Nexus Venture Partners, with participation from Uncorrelated Ventures.
ScyllaDB, a startup developing database tech for high-throughput, low-latency workloads, has raised $43M. The round was led by Eight Roads Ventures, with participation from AB Private Credit Investors, AllianceBernstein, TLV partners, Magma Ventures and Qualcomm Ventures.
Series F:
Employment Hero, an Australian employment management platform, has raised $167M at a $1.37B valuation. TCV led the round, and was joined by previous investors Insight Partners, AirTree, Seek and OneVentures.