A majority of European SaaS companies return their investment cost within 12 months, survey reveals

A majority of European SaaS-focused startups complete their payback period in less than 12 months, according to a new survey.

The panel of over 100 European SaaS vendors, surveyed by tech consultancy and investor GP Bullhound, suggests the average payback period is 11.5 months, for SaaS vendors targeting SMEs, and 10.4 months for those targeting mainstream enterprises.

The results of the data also show complex customer acquisition contracts for SaaS take longer to make investment returns.

For instance, it took 15.7 months on average for public sector-facing companies to complete payback, a similar timeframe to SaaS contractors in infrastructure and cybersecurity (15.2 months.)

Meanwhile, there was optimism among the surveyed SaaS CEOs, ahead of the macroeconomic turmoil anticipated next year.

Around 80% of the CEO respondents said revenue growth remained a top priority for 2023, with more than one third expecting at this stage to seek fresh capital next year.

The data was presented as part of GP Bullhound's inaugural European SaaS report, aimed at providing  in-depth regional metrics.

Alexis Scorer, partner at GP Bullhound, commented: "Given the macroeconomic headwinds that have significantly impacted public market SaaS valuations, there is an increasing focus on capital efficient growth for both public and private companies.

"There are reasons to be optimistic about the outlook for European SaaS, and our survey indicates strong levels of resilience amongst a significant proportion of European software companies.”