---
title: "The Mirage in the Software Clouds"
description: "Explore why public SaaS growth rates have plunged from 36% to 17% since 2023, and what this reveals about the changing dynamics of software markets."
categories: ["SaaS","AI","exits"]
keywords: ["SaaS growth rates","public SaaS companies","venture capital","David Spitz","software market dynamics","IPO trends","private equity","software spending","Theory Ventures","Tomasz Tunguz"]
ai_summary: "Public SaaS growth rates have plummeted, revealing shifts in software market dynamics and the impact of fewer IPOs."
date: 2025-03-14
lastmod: 2026-07-28
canonical_url: https://www.tomtunguz.com/mirage-saas-clouds/
author: "Tomasz Tunguz"
---

Public SaaS companies' growth rates have halved since 2023, as [David Spitz pointed](https://www.linkedin.com/posts/dspitz_saas-metrics-benchmarks-activity-7306074075066441728-xnnV/?utm_source=share&utm_medium=member_android&rcm=ACoAAABD0CgBi5RcGCfMphK0hhxl8jv7tYIq0cs), from 36% to 17%.

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/rger3nat28sysekf042k.png)

Why? There are few, fast growing, younger SaaS companies to sustain the growth rates.

The top quartile companies are growing at slower rates today than the bottom quartile companies in 2016. The median has never been lower in the last ten years.

It's not to say software spending is slowing (it's not), or that there aren't fast-growing businesses (they thrive in the private markets).

The dearth of IPOs since 2022 means high-growth companies just aren't going public. As companies age, they simply can't grow as quickly. 


![image](https://res.cloudinary.com/dzawgnnlr/image/upload/pm6m0zde9zxljikyvqdb.png)

[When will it change](https://x.com/afc/status/1898179313155162395)? With secondary liquidity easily sought & plentiful late stage private capital, it may be a long time & that means public SaaS analyses don't truly reflect the state of software anymore.