Micro Conf 2021 - The State of Independent SaaS Report

The2021State
ofIndependentSaaS
IN PARTNERSHIP WITH
FROM THE TEAM AT

This report was produced with the generous support of our partners, Hey and Stripe.

Introduction 2
1. The Founders 3
Key Insights 4
Quantity 5
Prior Company 6
Peak Revenue 6
Demographics 7
Gender 7
Race 7
Age 7
Working Hours 8
2. The Companies 9
Key Insights 10
Headcount 11
Funding 12
Funding Rounds 12
Funding Amount 13
Funding Sources 14
Idea Origin 15
Idea Validation 16
First Paying Customer 17
3. Pricing 18
Key Insights 19
Time Structure 20
Lowest Monthly Tier 21
Free Trial 22
Credit Card Up-front 23
Forever-free Plan 24
Setup Fee 25
4. SaaS Metrics 27
Key Insights 28
MRR 29
Recent Growth Rate 30
Visitor to Trial with Credit Card 31
Visitor to Trial without Credit Card 32
Trial-to-Paid with Credit Card 33
Trial-to-Paid without Credit Card 34
Revenue Churn 35
Lifetime Value 36
5. Marketing 38
Key Insights 39
Customer Roles 40
Ideal Customer 41
Advertising Payback 42
Google Ads 43
Social Media Monthly Ad Payback
by Platform 44
6. Growth 45
Key Insights 46
Founder Count vs. Growth 47
Prior Peak vs. Growth 48
Founder Hours vs. Growth 49
Ideal Customer 50
Monthly Price vs. Growth 51
Forever-free vs. Growth 52
Credit Card vs. Growth 53
Lifetime Value vs. Growth 54
NPS Score vs. Growth 55
Funding vs. Growth 57
Funding Amount vs. Growth 58
Thank You 59
Appendix: Methodology 60

INTRODUCTION
Welcome to the second annual State of
Independent SaaS!
For nearly a decade MicroConf has helped
startup founders grow faster through access
to world-class experts, and the world’s most
trusted community of ambitious, bootstrapped
and mostly bootstrapped founders. MicroConf
has become the mothership for founders like
yourself looking to learn and share strategies,
tactics, advice, and inspiration.
The beauty of creating this second report is
our ability to draw comparisons from one
year to the next. While the overall structure
is very similar to last year, you’ll notice we’ve
drawn comparisons wherever the data
deviated to a point that it became interesting.
In addition, we’ve mixed up the visuals in
many areas from simple bar and pie
charts to now include word clouds and
micro-infographics. The idea is to optimize
the presentation of this information to help
you understand it at a deeper level. This
all lines up with our mission to help you be
successful, faster.
WHYGATHERANDSHARETHISDATA?
This journey is difficult, and as founders we
are often forced to make difficult decisions
with incomplete information. The goal of this
report is to provide our industry with rules
of thumb, and provide you with the data you
need to make better decisions as you grow
your company.
After introducing the first report in 2020,
the world experienced major turbulence as
a result of COVID-19. This 2021 report helps
us quantify how the world of Independent
SaaS responded to new economic and
business norms.
In the pages that follow, you’ll see a number
of data points that reflect a changing world;
and many more that show the consistency
and persistence of independently-funded
SaaS founders.
Onward!
ROB AND THE MICROCONF TEAM

1. TheFounders
In this section we look at the founders who
run these SaaS companies. How many
started each company, prior startups they’ve
launched, and demographic information.

KEY INSIGHTS
EXPECTED
· 56% of respondents are single founders.
More than 90% are one- or two-founder
teams. This lines up with our experience
of the independent SaaS space.
· Virtually identical to last year, 6 in 10
founders have started a prior company.
· Diversity continues to be an issue, but
the numbers are slowly improving: 13% of
founding teams include a non-male
founder (up from 11% last year) and 23%
include a non-white founder (up from 21%).
UNEXPECTED
· Only 25% of founders work a “standard”
40-49 hour week. Almost half work 10-39
hours, presumably by choice (4-Hour
Workweek style) or due to a day job.
· Overall, founders worked fewer hours
per week this year. One might attribute this
to the remote schooling caused by
COVID-19, with many parents needing
to effectively homeschool their children
during their workdays.

The 2021 State of Independent SaaS 5
1.1 THE FOUNDERS
2.77%
Four +
5.21%
Three
35.67%
Two
56.35%
One
Howmanyfoundersstartedyourcompany?

1.2 THE FOUNDERS
60.07%
Yes
Atyourpreviouscompany,what
wasthepeakmonthlyrevenue
achievedatanytimeduringyour
company'soperation?
None 12.91%
Less than $9,999 / mo 37.09%
$10,000 – $29,999 / mo 21.15%
$30,000 – $99,999 / mo 12.91%
$100,000 – $249,999 / mo 8.52%
$250,000 – $999,999 / mo 4.67%
$1,000,000 + / mo 2.75%
39.93%
No
Beforefoundingyourcurrentcompany,
didyoustartapriorcompany?

1.3 THE FOUNDERS
Demographics
Amongthefoundersof
yourcompany,whichofthe
followingagecategories
arerepresented?
Under 18 years old 0.14%
18–19 years old 0.28%
20–29 years old 12.10%
30–39 years old 47.46%
40–49 years old 30.67%
50–59 years old 8.39%
60+ years old 0.96%
Amongthefoundersof
followingracialcategories
arerepresented?
White 87.09%
Indian or South Asian 7.95%
Latin American or Hispanic 5.13%
Asian 4.64%
Middle Eastern 4.30%
Black orAfrican-American 2.32%
Other 2.15%
Native Hawaiian or other 0.66%
Pacific Islander
American Indian orAlaskan Native 0.50%
Amongthefoundersof
followinggendercategories
arerepresented?
Male 96.37%
Female 12.05%
Non-binary 0.99%

1.4 THE FOUNDERS
30%
25%
20%
15%
10%
5%
0%
Less than
10 hours
10 to 29
hours
30 to 39
hours
40 to 49
hours
50 hours
or more
2020
2021
Inatypicalweek,howmanyhoursdoyou
personallyworkonyourcompany?

2. TheCompanies
This section covers the companies themselves,
including: team size, funding, idea validation,
and more.

KEY INSIGHTS
EXPECTED
· Independent SaaS companies tend to
have low headcounts, with 37% having no
employees and another 37% four or fewer.
This speaks to the early-stage of many
respondents, but also to the capital
efficiency of SaaS.
· 14% of respondents have raised at least
one round of funding, up from 12% last
year. This is in-line with observations that
funding is becoming more accessible to
bootstrappers through founder-friendly
alternatives like MicroConf’s TinySeed
accelerator and Indie.vc.
· The largest group of founders (38%) built a
prototype or MVP to validate their idea. This
feels in-line with common startup advice,
though one might argue this number could
easily be higher.
UNEXPECTED
· Less than half of these SaaS business ideas
came from a problem the founder was
facing, while 22% built to solve a problem
a customer or client was experiencing, and
12% to remedy an experience at the
founder’s day job.
· Validation is on the rise! Only 16% of founders
did not validate their business idea before
building, down from more than 30% last year.
· Only 4% used a landing page “smoke test”
to validate, a tactic that was once popular
due to mentions in The 4-Hour Workweek
and Start Small, Stay Small.
· Approximately 23% of respondents have
been running their business for 5-10 years
(down from over 25% last year). This is
still longer than expected given the relative
newness of SaaS, and the high chance a
startup fails in its first one or two years.

2.1 THE COMPANIES
40%
35%
30%
25%
20%
15%
10%
5%
0%
None
(sole employee)
1 to 4 5 to 19 20 to 49 50
or more
Inadditiontoyou,howmanyfull-time
orcontractemployeescurrentlywork
atyourcompany?

2.2 THE COMPANIES
85.69%
No
14.31%
Yes
Howmanyfundingroundshas
yourcompanyraised?
One 75.95%
Two 11.39%
Three 6.33%
Four + 6.33%
Haveyouraisedfundingforthiscompany?

2.3 THE COMPANIES
70%
60%
50%
40%
30%
20%
10%
0%
Less than
$100,000
$100,000
to $499,999
$500,000
to $999,999
$1,000,000 +
Sinceyourcompany’sfounding,howmuch
outsidefundinghaveyouraised?

2.4 THE COMPANIES
Founding
team's household
resources
Friends
& Family
Traditional
Angels
Indie
Funding
Venture
Capital
Accelerator Debt Other
25%
20%
15%
10%
5%
0%
Whichofthefollowingbestdescribes
thesourceorsourcesoffunding?

2.5 THE COMPANIES
22.10%
A problem my customers or
clients were experiencing
10.67%
A problem a friend or
relative was experiencing
8.24%
Research
0.19%
I purchased
this business
1.50%
Other
12.55%
An experience
at my day job
44.76%
A specific problem
I was experiencing
Whichofthecategoriesbelowbest
describeshowyoudevelopedtheidea
forthisproduct / company?

2.6 THE COMPANIES
I didn't validate
before building
Asked my
audience
Built a
prototype
or MVP
I copied a
competitor
I pre-sold
the product
I purchased
this company
Landing page
smoke test
Verbal
commitments
Other
40%
35%
30%
25%
20%
15%
10%
5%
0%
Whichbestdescribeshowyouvalidated
youroriginalbusinessidea?

2.7 THE COMPANIES
25%
20%
15%
10%
5%
0%
Less than
1 year ago
1 to 2
years ago
2 to 3
years ago
3 to 5
years ago
5-10
years ago
More than
10 years ago
Whendidyoulandthefirstpayingcustomer
foryourcurrentproduct / company?

3. Pricing
In this section we look at everything pricing,
including topics like: monthly vs. annual,
pricing tiers, free trials, and more.

KEY INSIGHTS
EXPECTED
· 83% of companies offer monthly or annual
pricing (or both).
· Last year we predicted the practice of not
asking for a credit card before a free
trial was on the rise, and this year’s report
confirmed it. This year, 78% of companies
with a free trial did not require a credit
card up-front (up from 73% last year).
· We also expected to see evidence that free
trials are on the rise, which was confirmed
by the 71% of companies that offered them
this year, up from 64% last year.
· Similarly with forever-free plans, this year
27% of companies offer one vs 20% last year.
UNEXPECTED
· More than 6% offer metered pricing, and
almost 5% offer pay-as-you-go.
· 4 in 10 companies have their lowest monthly
pricing tier under $30. Less than 1 in 10 have
their lowest tier above $250.
· 1 in 4 companies charges a setup fee to start
using their software.

3.1 PRICING
4.49%
Pay-as-you-go
2.29%
Other
2.29%
Revenue share
6.60%
Metered
35.67%
Annually
46.75%
Monthly
Whichofthefollowingbestdescribesthe
pricingtimestructureofyourproduct?

3.2 PRICING
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Free $1 to $29 $30 to $99 $100 to $249 $250 to $499 $500 or more
Whichofthefollowingbestdescribes
thepricingplanforyourbaseorlowest-cost
pricingtieronamonthlybasis?

3.3 PRICING
71.23%
Yes
28.77%
No
Doyouofferafreetrialforyourproduct?

3.4 PRICING
78.40%
No
21.60%
Yes
Whenapotentialcustomerregistersfora
freetrial,doesyourcompanyrequestacredit
cardnumberinordertostartthetrial?

3.5 PRICING
72.95%
No
27.05%
Yes
Doyouofferaforever-freeplan?

3.6 PRICING
74.48%
No
25.52%
Yes
Doyouchargeasetupfee?

4. SaaSMetrics
This section dives into the companies’ SaaS
metrics. Data like: monthly recurring
revenue (MRR), growth rates, trial to paid
conversion rates, and more.

KEY INSIGHTS
EXPECTED
· 15% of companies have flat revenue,
neither growing or declining. This is down
from 20% last year.
· The most common month-over-month
growth rate is 1-9%, with more than 45%
falling into this bucket.
UNEXPECTED
· Monthly recurring revenue (MRR) skewed
earlier-stage this year, with quite a few more
respondents under $5k MRR than last year.
· 7% of founders don’t know their month-
over-month growth rate.
· 36% of companies who offer a free trial don’t
know their visitor to trial conversion rate.
This number continues to be surprisingly
high (though it’s down from 40% last year).
· Nearly 15% of founders don’t know their
trial to paid conversion rate (up from 10%
last year).
· 13% of companies report net negative revenue
churn (up from 10% last year). Nearly 1 in 5
companies report churn under 1%!

4.1 SAAS METRICS
Less than
$1,000
$1,000
to $4,999
$5,000
to $14,999
$15,000
to $29,999
$30,000
to $49,999
$50,000
to $99,999
$100,000
to $249,999
$250,000
to $999,999
$1,000,000 +
25%
20%
15%
10%
5%
0%
2020
2021
WhatisyourMonthlyRecurring
Revenue(MRR)?

4.2 SAAS METRICS
Negative 0% 1% to 4% 5% to 9% 10% to 19% 20% to 39% 40% or more Don’t Know
30%
25%
20%
15%
10%
5%
0%
Whatbestdescribesyourcompany’saverage
Month-Over-Month(MOM)growthrateover
thepast3months?

4.3 SAAS METRICS
35%
30%
25%
20%
15%
10%
5%
0%
Less than 1% 1% to 2% 3% to 5% 6% to 10% 11% to 20% 20% or more Don’t Know
Ifyouofferafreetrialandaskfora
creditcardupfront,whatpercentageofyour
website’suniquevisitorsstartatrial?

4.4 SAAS METRICS
40%
35%
30%
25%
20%
15%
10%
5%
0%
Less than 1% 1% to 2% 3% to 5% 6% to 10% 11% to 20% 20% or more Don’t Know
Ifyouofferafreetrialanddon’taskfora
creditcardupfront,whatpercentageofyour
website’suniquevisitorsstartatrial?

4.5 SAAS METRICS
1% to 9.9% 10% to 19.9% 20% to 39.9% 40% to 49.9% 50% to 59.9% 60% + Don’t Know
30%
25%
20%
15%
10%
5%
0%
2020
2021
Forprospectsthatstartafree-trialwitha
creditcardup-front,whatpercentagebecome
payingcustomers?

4.6 SAAS METRICS
Less than 1% 1% to 5.9% 6% to 10.9% 11% to 15.9% 16% to 19.9% 20% to 29.9% 30% + Don’t Know
25%
20%
15%
10%
5%
0%
Forprospectsthatstartafree-trialwithouta
creditcardup-front,whatpercentagebecome
payingcustomers?

4.7 SAAS METRICS
20%
15%
10%
5%
0%
Net Negative
Churn
0% to 0.9% 1% to 2.9% 3% to 5.9% 6% to 9.9% 10% to 14.9% 15% + Don’t Know
Overthepast3months,whatwasthe
averagemonthlyrevenuechurn?

4.8 SAAS METRICS
Less than $249 $250 to $499 $500 to $999 $1,000
to $1,999
$2,000
to $4,999
$5,000 + Don’t Know
25%
20%
15%
10%
5%
0%
2020
2021
Whichofthefollowingbestdescribesyour
averageCustomerLifetimeValue(LTV)?

5. Marketing
This section covers several topics around
marketing, including: ideal customers and
the top advertising platforms.

KEY INSIGHTS
EXPECTED
· Nearly half of companies indicate their
ideal customer is a business with less than
50 employees.
· 41% of companies don’t advertise.
· Half of companies that advertise run ads
on Google or Facebook.
UNEXPECTED
· 8% of companies sponsor events.
· Only 2.4% of companies that advertise use
online display ads (down from 4% last year).
Only 2.5% advertise on Twitter (down slightly
from 3% last year).
· Almost 40% of companies that advertise
report a 1-4 month payback on their Google
and Facebook ad spends.
· More than 25% of companies don’t know
their payback period for either ad network.

5.1 MARKETING
Founders / CEOs
Operations and Support
Developers / IT
HR
Accounting
Marketing
Freelancers / Agencies
Admin Staff
Consumers
Aspiring entrepreneurs
Sales
Other
Whatarethemostcommonroles
yourcustomershold?

5.2 MARKETING
30%
25%
20%
15%
10%
5%
0%
Aspiring
Entrepreneurs
Businesses
(1 to 9)
Businesses
(10 to 49)
Businesses
(51 to 249)
Businesses
(250 +)
Consumers Government Non-profits Other
Whichofthefollowingcategories
bestdescribestheidealcustomerfor
yourcompany?

5.3 MARKETING
We don’t run ads
Google AdWords
App store Ads
Event sponsorship
Other
Facebook Ads
LinkedIn Ads
Offline Ads
Online display advertising
Twitter Ads
Other online advertising
Whatadvertisingactivitiesdoyou
believehavethebiggestimpacton
growingrevenue?

5.4 MARKETING
40%
35%
30%
25%
20%
15%
10%
5%
0%
Less than
1 month
1 to 4
months
5 to 8
months
9 to 17
months
18 +
months
Don’t Know
2020
2021
GoogleAdsMonthlyPayback

5.5 MARKETING
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Less than
1 month
1 to 4
months
5 to 8
months
9 to 17
months
18 +
months
Don’t Know
SocialMediaMonthlyAdPayback
byPlatform

6. Growth
This section looks at how several factors
correlate to revenue growth. Recall that
correlation does not equal causation. Just
because two factors move in lock-step, does
not mean that one is causing the other.

KEY INSIGHTS
EXPECTED
· In line with expectations, in general the
larger the business a startup is selling to,
the faster the revenue growth.
· For the most part, higher prices and higher
lifetime value both correlate strongly with
faster growth.
· Companies that raised more funding grew
faster. One can imagine this is the case for
several reasons:
· Companies that are growing faster
have the ability to raise more money.
· More funding can translate to a larger
team size, with more people focused
on growing the business.
· Founders who raise funding focus on
faster growth, whereas founders who
self-fund may elect not to.
· There is a strong correlation between more
hours worked by a founder and stronger
revenue growth.
UNEXPECTED
· More founders correlate with higher growth,
except for a substantial dip with 4+ founders.
· Free trial vs. no trial and free plan vs. not
have little correlation with revenue growth.
· We found either very little, or unexplainable,
correlations with Net Promoter Score (NPS),
churn, and growth.
· Asking for a credit card before a trial has
little correlation with revenue growth.

6.1 GROWTH
$2,500
$2,000
$1,500
$1,000
$500
$0
One Two Three Four +
MRR
Growth
/
Month
FounderCountvs.Growth
One would likely expect more growth with more
founders. Perhaps the drop off above three founders
shows the challenges of communicating with a larger
team early in a product’s life.

6.2 GROWTH
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
None $1,000
to $9,999
$10,000
to $29,999
$30,000
to $99,999
$100,000
to $249,999
$250,000
to $999,999
$1,000,000 +
MRR
Growth
/
Month
PriorPeakvs.Growth
Few surprises here. In general, the more money
a founder’s prior company made, the faster their
next company grew.

6.3 GROWTH
$2,000
$1,500
$1,000
$500
$0
Less than
10 hours
10 to 29
hours
30 to 39
hours
40 to 49
hours
50 hours
or more
MRR
Growth
/
Month
FounderHoursvs.Growth
These results show a pronounced correlation of faster
growth with more founder hours worked. This could be
because more hours means they ship faster, or because
successful companies that are growing quickly motivate
their founders to invest more of their time.

6.4 GROWTH
$2,000
$1,500
$1,000
$500
$0
Consumers Aspiring
Entrepreneurs
Businesses
(1 to 9)
Businesses
(10 to 49)
Businesses
(51 to 249)
Businesses
(250 +)
MRR
Growth
/
Month
IdealCustomer
This data generally fits common MicroConf wisdom that
if your customers are larger companies, your growth rate
will be faster. This is usually because larger companies
are less price sensitive and churn far less often than
consumers or small enterprises.

6.5 GROWTH
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Free $1 to $29 $30 to $99 $100 to $249 $250 to $499 $500 or more
MRR
Growth
/
Month
MonthlyPricingvs.Growth
These results imply higher price points correlate with
faster growth, most noticeably with monthly price points
above $500 growing 2-5× faster than the others. We see
a curious dip around $250-499 (which also happened
last year), and that the existence of a free plan correlates
with slightly higher than baseline growth.

6.6 GROWTH
$1,500
$1,200
$900
$600
$300
$0
Free Trial Only Forever-Free Plan
Yes No Yes No
MRR
Growth
/
Month
Forever-Freevs.Growth
The data implies an almost inconsequential increase in
growth rate between companies that do and do not offer
a forever free plan. Likewise, slightly faster growth from
companies with a free trial.

6.7 GROWTH
$1,500
$1,200
$900
$600
$300
$0
Yes No
Do you ask for a Credit Card to start a trial?
MRR
Growth
/
Month
CreditCardvs.Growth
These results imply that asking for a credit card before
a trial has little impact on a company’s growth rate.

6.8 GROWTH
$2,000
$1,500
$1,000
$500
0
Less than
$249
$250
to $499
$500
to $999
$1,000
to $1,999
$2,000
to $4,999
$5,000
to $9,999
$10,000
or more
MRR
Growth
/
Month
CustomerLTVvs.Growth
Intuitively, a higher customer Lifetime Value (LTV)
is correlated with faster growth.

6.9 GROWTH
1 to 19 20 to 39 40 to 59 60 to 79 80 to 99 100 +
$2,500
$2,000
$1,500
$1,000
$500
$0
MRR
Growth
/
Month
NPSScorevs.Growth
I should also note that we looked at churn rate vs.
NPS and found little correlation. Meaning higher NPS
did not translate into noticeably lower churn, contrary
to intuition.

6.10 GROWTH
$1,800
$1,500
$1,200
$900
$600
$300
$0
Yes No
MRR
Growth
/
Month
Fundingvs.Growth
Not surprisingly, companies that raised funding grew
a little over 1.5× faster than those who did not.

6.11 GROWTH
Less than
$100,000
$100,000
to $499,999
$500,000
to $999,999
$1,000,000 +
$5,000
$4,000
$3,000
$2,000
$1,000
$0
MRR
Growth
/
Month
FundingAmountvs.Growth
Following up on the previous correlation, the more
funding a company raises the faster it grows. A couple
likely explanations: having more funding allows you to
grow faster, and companies that are growing faster are
able to raise more funding.

Thank you for checking out the second
annual State of Independent SaaS! I hope
it serves you well on your entrepreneurial
journey.
To stay in the loop on next year’s State of
Independent SaaS report and find out more
about the world’s most trusted community
of bootstrapped and mostly bootstrapped
SaaS founders, head to MicroConf.com.
ROB AND THE MICROCONF TEAM

APPENDIX:
METHODOLOGY
OVERVIEW
Since 2011 MicroConf has helped startup
founders grow faster through access to
education from world-class experts,
and the world’s most popular community
of ambitious, non-venture track startup
founders. MicroConf has become the
mothership for founders looking to learn
and share strategies, tactics, advice, and
inspiration.
The purpose of this survey and report is
three-fold:
1.
to gather critical information on the
behaviors, attitudes and “firmagraphics”
of participating members;
2.
statistically analyze the collected
data and
3.
organize and interpret the results in
a final report, covering topics from idea
validation to marketing approaches to
SaaS benchmarks, and more.
The founders who completed the survey receive the Marketing
Extras bonus section of this report, not immediately available
to the larger community.
RESEARCHDESIGN
A web-based survey was sent to nearly 25,000
startup founders in MicroConf’s database.
The survey was conducted between
October 6, 2020 and October 21, 2020. Only
those founders who were over 18, currently
operating a company that was generating
revenue, and charging recurring fees for their
software were able to complete the survey.
In total, 673 respondents participated in the
survey, with 534 individuals completing
the survey. On average, it took respondents
15 minutes to complete the survey.
The distribution of responses in each
question is presented in this report as well
as an analysis of the relationship between
company strategies and growth where
appropriate.
Special thanks to Brittany Ortiz for her hard work analyzing
the data for this report. Thanks to Vanda Marasan for her
exceptional visual design work on this report.

Micro Conf 2021 - The State of Independent SaaS Report

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Micro Conf 2021 - The State of Independent SaaS Report