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How Much Should Your Startup Spend On Customer Account Expansion? - Tomas Tunguz, Redpoint Ventures

Percent of SaaS Bookings Derived from Upsell, PacCrest 2014 Survey

A good CFO can provide the startup CEO with strategic analysis in order to help drive revenue growth across multiple dimensions. The intersection of finance, sales, marketing, and operations is crucial for the scalable growth of any startup and private company.

The blog post below by Tomasz Tunguz who is a VC at Redpoint Ventures in Silicon Valley focuses on the key strategic issue of customer account expansion for SaaS companies.

Some key metrics mentioned include:

  • Expansion revenue accounts for between 8-26% of total annual bookings, increasing as the company scales.

  • Startups have 5 - 7 salespeople for new customer growth and acquisition for every 1 salesperson hired to increase account size.

  • At scale, these teams contribute upwards of 25% of annual bookings.

While the this data is based on survey data of Saas startups and public companies, it’s very relevant for technology startups in different areas.

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