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RAC’s Private Software Growth Index: June 2026

We believe that quality data is essential to helping software companies scale, which is why we make our own internal consolidated metrics available to founders each month. These numbers are aggregated from hundreds of private software companies that RAC reviews across our funds, using only primary sources, validated by our investment team. We exclude companies that are below $2.5 million of ARR.

The June metrics by growth cohort:

The June metrics by Rule of 40 cohort:


To learn more about the Private Software Growth Index and how it was constructed, please see the disclosure at the bottom of this post.

Our observations on the June data:

  • The faster vs. slower-growing cohorts in our software dataset are spending about the same on sales & marketing (33% vs. 30% of ARR)

  • However, the faster-growing cohort is stickier, and upsells more systematically (111% net retention vs. 95% in the slower cohort)

  • Faster-growing companies also spend meaningfully more on product/R&D, leading to higher burn

  • Performance gap between the “above” vs. “below” rule-of-40 cohorts is notable: there is more than a 3x difference in the median growth rates between the two (94% vs. 29% growth)

  • “Above” rule-of-40 companies actually spend less as a group on sales & marketing despite much higher median growth

  • We have noticed a widening dispersion in performance between top performing cohorts vs. all others. For example, the delta between the median and top quartile rule-of-40 in our dataset has nearly doubled since December 2022 (it’s now a delta of more than 30 percentage points). Similar patterns can be found elsewhere in our data as well. Our theory is that AI tooling is likely enhancing what works at great companies, but also amplifying any friction that exists in the less-successful ones.

     

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*disclosures
The Private Software Growth Index is calculated by RAC, from information compiled from third party resources. There can be no assurance that the underlying data provided to RAC is accurate. The Private Software Growth Index is calculated only from a subset of private B2B software companies in the $2.5-20M ARR range, and therefore may not be representative of all companies of this type and size.

None of this information or metrics shown or other product or service constitutes an offer to buy or sell, or a promotion or recommendation of, any security, financial instrument or product or trading strategy. Further, none of the information or metrics is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

The information is provided "as is" and the user of the Information assumes the entire risk of any use. RIVERSIDE, RIVERSIDE ACCELERATION CAPITAL AND THEIR AFFILIATES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall Riverside, Riverside Acceleration Capital and their affiliates be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information even if advised of the possibility of such damages.
Jim Toth
Jim Toth
Managing Partner
07/24/2026
Category:
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