23 Takeaways (So Far) from the 2017 Business-to-Government SaaS Global Survey

Urban.Us is starting to get a clearer picture of the gov-tech startup ecosystem

by Stonly Baptiste, Co-Founder and Partner, Urban.Us / August 29, 2017

The survey to benchmark gov-tech startups is still underway, but we already have a meaningful enough sampling of responses and are sharing our preliminary takeaways.

Hometown Advantage

1. Two-thirds of respondents started with their hometown (or home state) as a first customer. Government customers are targeted primarily based on public expressions of interest in the problem area or in innovation in general.

Funding

2. 75 percent of respondents self funded and/or raised money from friends and family before raising venture funding.

3. One-third of respondents sell to consumers and/or businesses as well as governments.

4. Firms selling only to government were more likely to raise venture funding.

5. Other forms of funding include grants, debt and competitions/awards. (No ICOs (yet).)

Customers

6. The most popular sales model is to target discretionary budget spending. This is more popular amongst earlier teams. (You can find budget levels at http://openprocure.us/.)

7. One-quarter to one-third of companies also sell via collaborative development/fee sharing, subcontractors/partnerships and/or private/nonprofit funded projects.

8. Very few companies (less than 1 in 10) have a freemium offering.

9. The majority of respondents use multiple strategies, but there are a few that focus on just one target competitive procurement (RFPs).

10. There is a concentration of focus on medium and large cities. Very few are focused on small cities, federal governments and special districts.

Sales

11. "Average Annual Contract Value" are roughly $35,000, and range from as low as $5,000 to as high as $100,000.

12. From 2015 to 2016, the majority experienced a moderate growth of 30 percent. A few grew revenue by five or six times.

13. Most expect similar or slower growth for 2017.

14. Contract terms are 2 years on average.

15. The sales cycle for almost half of respondents were 90 days or less. But if strategies included “competitive procurement,” this number averaged much higher at 270 days. The latter cohort tends to have larger contract values ($56,000 average for “RFP” focused companies vs $16,000 average for “discretionary budget” focused companies) and higher gross sales (in the 7- and 8-digit millions for “RFP” focused companies).

16. Delays in receiving payments range from 2 weeks to 2 months on average.

17. Almost all have some component of service contributing to revenue, even if service itself is not an offering. This suggests that value-added service is the rule and not the exception for B2G sales.

Marketing

18. Only an average of 3 percent of growth was from upsells to existing customers.

19. Average marketing spend per $1 of revenue by stage:

  • Stage (revenue in 2016)
    • Pre-seed ($10K to $100k): 0.1018
    • Seed ($100K to $3M): 0.0694
    • A ($3M - $10M): 0.005

Teams and Tech

20. On average, almost one-quarter of staff are dedicated to sales.

21. Head count per $100,000 of revenue by stage:

  • Stage (revenue in 2016)
    • Pre-seed ($10K - $100K): 9.4
    • Seed ($100k - $3M): 3.25
    • A ($3M - $10M): 1

22. Salesforce/Salesforce IQ are the predominantly used CRM platforms. Other platforms used include: ProsperWorks, Pipedrive, Hubspot, InsightSquared, Insightly, Indinero and Marketo

23. Product offerings include the following technologies: Web, mobile, crowd-sourcing, machine learning, IoT, blockchain, biotech and quantum computing.

More to come, but please help by spreading the word about our B2G SaaS survey. Participants in the survey will get a copy of the full anonymized dataset.

This story was originally published on Medium.com. Republished with permission.

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