growth revenue data companies percentile consumer company

techsuch May 9, 2021 0 Comments

Revenue Growth Benchmarking for Startups (Updated for 2018 IPOs)# Revenue Growth Benchmarking for Startups (Updated for 2018 IPOs)Follow me on Twitter for my thoughts on venture capital and startups.Last year I published a post on revenue growth rate benchmarking. Based onpopular demand, I’m updating the post to include data from 2018. The updateddata reflects historical revenue from 191 IPOs, including 31 new IPOs fromlast year. For this update, I’m presenting the data in a new format thatallows for more granular benchmarking. Previously, the revenue was presentedin ranges, but this iteration allows you to see percentile growth rates basedon your company’s exact revenue.A quick overview of the methodology: * Gathered historical GAAP revenue growth data from 191 enterprise and consumer IPOs between 2010 and 2018 (over 600 data points). * Calculated forward-year growth rates (“Y”) for each revenue data point (“X”). By presenting the data this way, it can be a useful forecasting tool. * Estimated percentiles (90th, 75th, 50th, 25th) from power trendlines based on a regression of the data.# Revenue Growth Benchmarks for Enterprise Tech StartupsThe enterprise IPO data includes revenue growth rates from 126 companies (over400 data points). The chart below allows you to benchmark the growth of yourcompany against all enterprise tech companies that have gone public over thelast nine years. The dotted lines on the scatter plot estimate the 90th, 75th,50th, and 25th percentile forward growth rates for a given revenue scale. Asan exercise, take your current company revenue projections and plot them onthe chart. Where do they stack up?How to interpret the data: if your company generated $20 million of revenue in2018, projecting 198% year-over-year growth for 2019 ($59.6 million) wouldfall in the 90th percentile. (BTW — If your company is growing this quickly,IVP would love to meet with you).It may be hard to eyeball exact figures on the chart so I created a calculatorthat can be accessed at the link below. Simply type in your annual revenue andit will display the 90th, 75th, 50th, and 25th percentile forward growthrates.## The Power of Hyper-GrowthThe power of hyper-growth is best demonstrated in the chart below. A companyconsistently growing at the 90th percentile would reach $100 million ofrevenue in four years. Conversely, one growing at the 50th percentile wouldtake more than seven years to reach that milestone.Note: Assumes Year 1 Revenue of $1 millionThe special group of enterprise companies that crossed the 90th percentilebarrier during their growth phase includes:Combined, these 21 companies represent over $280 billion in market value, witha median valuation of $9.4 billion. While revenue growth is important,balancing it with high gross margins and strong sales efficiency is the holygrail. The median gross margin of the companies above was 72%.# Revenue Growth Benchmarks for Consumer Tech StartupsThe consumer IPO data includes revenue growth rates from 65 companies (over200 data points). The chart below allows you to benchmark the growth of yourcompany against all consumer tech companies that have gone public over thelast nine years. It is worth noting that the data for consumer IPOs is lessrobust and has more variance than the data for enterprise IPOs.Below is a link to the consumer growth calculator. Simply type in your annualrevenue and it will display the 90th, 75th, 50th, and 25th percentile forwardgrowth rates.The group of consumer companies that crossed the 90th percentile mark duringtheir hyper-growth phase includes:Combined, these 19 companies represent over $575 billion in marketcapitalization, largely dominated by Facebook representing 80% of the total.It is worth noting that several of the consumer companies above have falteredas public companies, namely Snap, Blue Apron, Groupon, and LendingClub. Thishighlights the importance of achieving high growth while also building adefensible business model and one with sustainable unit economics at maturity.# Final ThoughtsMy goal in publishing this is to help founders more easily benchmark theircompany’s growth vs its peers. Special thanks to 10XCEO for making my priorpost part of their program and helping spread the word. If you found this postvaluable, please consider sharing it.> “A startup is a company designed to grow fast… The only essential thing is> growth. Everything else we associate with startups follows from growth.” —> Paul Graham, Y CombinatorAbout IVP: With $7 billion of committed capital, IVP is one of the premierlater-stage venture capital and growth equity firms in the United States.Founded in 1980, IVP has invested in over 400 companies with 108 IPOs. IVP isone of the top-performing firms in the industry and has a 37-year IRR of43.1%. IVP specializes in venture growth investments, industry rollups,founder liquidity transactions, and select public market investments.

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