Software Growth

T2D3

T2D3 means triple, triple, double, double, double. It is a venture benchmark for SaaS growth from $2M ARR toward $144M ARR over five years.

T2D3 stands for triple, triple, double, double, double. It describes a growth path for a venture-backed SaaS company: after reaching about $2 million in annual recurring revenue, triple ARR two years in a row, then double it three years in a row. Neeraj Agrawal, a general partner at Battery Ventures, laid it out in a February 2015 TechCrunch article.

How to calculate T2D3

Start with ARR when the company has found its footing, then apply the multipliers in order:

With $2 million as the starting point, the path is:

  • Year 1: $2M to $6M (triple)
  • Year 2: $6M to $18M (triple)
  • Year 3: $18M to $36M (double)
  • Year 4: $36M to $72M (double)
  • Year 5: $72M to $144M (double)

Check: 2 x 3 x 3 x 2 x 2 x 2 = 144. These milestones match the ARR figures in Agrawal's article, which connects them to organizational stages such as founders closing early sales, building a layered sales team and expanding abroad.

What it is for

T2D3 is a yardstick for venture investors. Companies that follow it become large enough to go public or sell at high valuations, and it helps founders see what a raise implies. It pairs with other investor tests like the Rule of 40.

Why most small SaaS companies should not copy it

  • It assumes funding. Tripling ARR twice means hiring ahead of revenue and spending on sales and marketing. That cash comes from investors.
  • It starts at $2M. Most bootstrapped products sit far below that, so the formula says little about early growth.
  • The maths gets harder. Doubling from $72M is far more work than tripling from $2M. Few companies hold the pace.
  • It ignores profit. Growth is the only target.

A small-company version

If you are at $20,000 MRR, or $240,000 ARR, doubling for three years takes you to $480,000, $960,000 and $1,920,000. That is a healthy, achievable path for a profitable bootstrapped company, and it needs no outside money if margins hold. It is also smaller than the venture curve, which would put you at about $2.2M in ARR in year two. Compare your rate with compound monthly growth rate to see how your pace stacks up.

Use T2D3 as a reference for what investors expect, not as a target you must hit. If you plan to raise a Series A, know the pace. If you do not, set a growth rate your cash flow and sanity can support.

Sources

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