Analysis of 68 public SaaS companies reveals the “efficiency valley” that destroys GTM performance between $500M-$4B.
Your $2.5B SaaS company spends 38% of revenue on sales and marketing. Is that good or bad?
Most PE firms and operators lack clear benchmarks for GTM efficiency. They know their own numbers but don’t know how they compare to peers at similar scale. This makes budget reviews more art than science—and leaves millions in waste unidentified.
We analyzed 68 public SaaS companies from $300M to $40B in revenue to create definitive efficiency benchmarks by revenue stage and business model.
The most striking finding: Companies experience an “efficiency valley” between $500M and $4B where GTM performance collapses. Efficiency drops 43% when companies cross $500M—from 0.7x to 0.4x—and doesn’t fully recover until they exceed $7B in revenue.
Here are the benchmarks across all 68 companies:
| Revenue Stage | S&M % | Growth % | Efficiency | Status |
| <$500M | 29% | 19% | 0.7 | Healthy |
| $500M-$1B | 36% | 16% | 0.4 | Efficiency collapses |
| $1B-$2B | 40% | 19% | 0.5 | Bloat zone |
| $2B-$4B | 34% | 18% | 0.5 | Valley continues |
| $4B-$7B | 37% | 22% | 0.6 | Slight recovery |
| >$7B | 26% | 19% | 0.7 | Returns to healthy |
Efficiency = Growth % ÷ S&M %. Data represents average across all business models (54% Sales-Led, 37% Hybrid, 9% PLG).
What causes the valley? Between $500M and $1B, companies hire aggressively without improving productivity. S&M spending jumps 7 percentage points while growth declines 3 points. Sales teams double in size, but rep productivity drops 25%. Geographic expansion accelerates before processes are ready. Partner programs balloon without clear ROI. The pattern persists through $4B before companies finally optimize their way out.
Business model matters significantly. Sales-led companies see the most dramatic collapse—efficiency drops 67% at $500M (from 1.5x to 0.5x) and never fully recovers. Hybrid companies struggle at small scale (0.4x efficiency under $500M) but perform best at mega-cap scale (0.7x at $7B+). PLG companies maintain superior efficiency at every stage (0.9-2.1x), but tellingly, no pure PLG companies exist below $2B revenue in public markets.
The lesson: pick ONE motion until you reach $2B, execute it excellently, then add the second. Companies attempting hybrid too early create channel conflict and resource dilution that destroys efficiency.
For PE firms conducting 2025 budget reviews, here’s the framework:
First, benchmark your portco against its revenue cohort and business model. If you’re a $2.5B company spending 40% on S&M (benchmark: 34%), you’re 6 percentage points over—roughly $150M in annual waste.
Second, if below median efficiency, freeze S&M increases until you fix fundamentals. The data proves that throwing more money at an inefficient GTM engine doesn’t work. Companies in the efficiency valley that increase S&M spend see growth rates decline, not improve.
Third, target top-quartile efficiency for your cohort. Moving from 0.4 (bottom quartile) to 0.8 (top quartile) at $2B revenue implies 10-15 points lower S&M spend. That’s $200-300M in annual savings, or $1.6-2.4B in enterprise value creation at 8x revenue multiples—with zero incremental capital deployed.The takeaway? The efficiency valley is real, predictable, and avoidable. Top performers maintain discipline through the $500M-$4B scaling phase by fixing productivity before adding headcount, building RevOps infrastructure before geographic expansion, and pruning low-ROI programs before scaling them. The companies that avoid the valley create billions in additional enterprise value. Those that fall into it rarely climb out.
Questions or advisory inquiries: info@kaaptiv.com