A study of privately held small businesses finds overall growth of 17% since early 2022, with the sharpest rise among startups with less than $1 million revenue. “These smaller startups … may represent some of the most promising companies of the next decade,” the Maxio Institute report says.

Since early 2022, small privately held B2B startup companies have turned around COVID-era losses to steady revenue gains, Maxio Institute found in a recent study of more than 2,400 small B2B companies.

“These smaller startups are now outpacing the rest,” the report says. “Having found ways to grow despite significant headwinds, they may represent some of the most promising companies of the next decade.”

It adds, “This trend was also observed following the 2008 financial crisis, when industry leaders such as Asana, Square, Uber, and Venmo were founded.”

Maxio Institute is the research arm of Maxio, a provider of a billing and financial operations technology for privately held B2B companies. It describes its technology platform as designed “to meet the unique challenges of B2B SaaS and recurring-revenue businesses.”

Maxio cites consistent post-COVID growth rate

“The post-COVID B2B market is continuing to grow,” Maxio says in its “B2B Growth Report: Private Company Benchmarks & Analysis.” “Q2 was a slightly slower quarter than Q1, but viewing the trend across the last 10 quarters shows a remarkably consistent growth rate. The average growth rate for B2B companies since the beginning of 2022 is 17%, exactly equal to this quarter’s result.”

It adds, “While this growth trajectory has been the norm at smaller B2B firms, it would be the envy of many larger, public companies. The members of the S&P 500, for example, have an average revenue growth rate of 6.9% over the last 5 years and are projected to grow by 5.5% in 2024.”

The report found that B2B companies “are spending on infrastructure, such as logistics and supply chain technology, which experienced a 36% annualized growth rate in Q2. Other essentials like cybersecurity and healthcare are also booming this year, with 36% and 26% Q2 growth rates, respectively.”

The report analyzes anonymized billing data from more than 2,400 Maxio customers, nearly 60% of which are SaaS companies. Maxio says the report offers “a comprehensive look at growth rates, pricing strategies, invoice characteristics, and industry trends.”

It notes that the report’s data set represents approximately 5% of the global SaaS market, “offering a new perspective on market performance beyond the often-highlighted 140 publicly traded B2B SaaS companies.”

Maxio reports growth for ecommerce software firms

Among B2B software companies, those that Maxio included in the “ecommerce and retail technology” category grew 11% in the second quarter of this year and an average of 7% over the last eight quarters.

The five software company categories with the largest percentage revenue gains for Q2 2024 and averaging over the last eight quarters:

⦁ Cybersecurity: 36%, 28%.

⦁ Transportation, logistics, supply chain technology, 36%, 17%.

⦁ Restaurant, hospitality, and leisure technology, 26%, 16%.

⦁ Developer and engineering technology, 26%, 41%.

⦁  FinTech, 25%, 28%.

The report’s other findings refer to the roles of fixed-rate and usage-based pricing models and trends in AI and cybersecurity:

  • Fixed-rate pricing models, as compared to usage-based pricing, outperform at smaller businesses with revenue under $1 million. With fixed-based pricing, “these firms benefit from the predictability of set contracts and grow at least twice as fast as their usage-based peers,” the report says.

But it adds, “Once companies hit $10 million in revenue, the trend is reversed, with those that embrace usage-based pricing growing nearly twice as fast as those that stick with a fixed-rate model.”

  • Revenue growth at B2B AI companies has slowed since its peak of 50% in the first quarter of 2022. “In 2023 and 2024, they grew at an average annualized rate of 21%, aligning more closely with overall B2B market trends,” the report says. “This slowdown may be partially due to the increasing capabilities of foundational AI models, like OpenAI and Anthropic, which make some smaller AI companies obsolete. Smaller AI companies are being forced to find their own niche or risk becoming only one feature in a larger model.
  • Cybersecurity is the fastest-growing industry tracked over the past two years, with an average annual growth rate of 35%. “Fueled by significant investments in 2021 and the ongoing need to combat rising ransomware and phishing scams, which are further intensified by AI-generated content, the prominent role of cybersecurity is expected to persist due to ongoing digitization and AI expansion,” the report says.

Maxio, formerly known as Chargify and SaaSOptics, is backed by Battery Ventures. Maxio says it processes more than $16 billion in annual revenue for its more than 2,400 customers.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].

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