Growing into enterprise customers

Zoominfo recently went public and in their prospectus is a chart that shows their migration to larger enterprise customers. The chart is subtle, but it does show a transformation that most SaaS companies will undergo: as your product becomes more feature rich and valuable, the customer base migrate towards higher value enterprise customers.

Why are enterprise customers higher value? A few reasons: i) they can afford to pay more; ii) they prefer signing longer term contracts; and iii) they’re more likely than small customers to weather a recession; iv) they tend to give better product feedback that can help guide the product roadmap; and v) when you go to sell your company, your valuation will likely be higher as strategics and private equity firms tend to prefer enterprise customer bases for the reasons above.

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As the table above shows Zoominfo is seeing the most growth (64%) in it’s higher value enterprise clients (those with an average contract value of $100k+) and the share of bookings from those customers has grown from 30% to 34% in 1 year. This is the trend you’ll likely see in your own SaaS business as you grow, and it’s one you should not only welcome but actively push for.

Visit us at blossomstreetventures.com and email us directly with Series A or B opportunities at sammy@blossomstreetventures.com. Connect on LI as well. We invest $1mm to $1.5mm in growth rounds, inside rounds, small rounds, cap table restructurings, note clean outs, and other ‘special situations’ all over the US & Canada.

Written by

co-founder at Blossom Street Ventures

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