Revenue Growth Benchmarking for Startups (Updated for 2018 IPOs)

Parsa Saljoughian
Feb 20, 2019 · 5 min read
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Last year I published a post on revenue growth rate benchmarking. Based on popular demand, I’m updating the post to include data from 2018. The updated data reflects historical revenue from 191 IPOs, including 31 new IPOs from last year. For this update, I’m presenting the data in a new format that allows for more granular benchmarking. Previously, the revenue was presented in ranges, but this iteration allows you to see percentile growth rates based on 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 Startups

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How to interpret the data: if your company generated $20 million of revenue in 2018, projecting 198% year-over-year growth for 2019 ($59.6 million) would fall 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 calculator that can be accessed at the link below. Simply type in your annual revenue and it will display the 90th, 75th, 50th, and 25th percentile forward growth rates.

*** CLICK HERE FOR THE ENTERPRISE GROWTH CALCULATOR ***

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The Power of Hyper-Growth

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Note: Assumes Year 1 Revenue of $1 million

The special group of enterprise companies that crossed the 90th percentile barrier during their growth phase includes:

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Combined, these 21 companies represent over $280 billion in market value, with a median valuation of $9.4 billion. While revenue growth is important, balancing it with high gross margins and strong sales efficiency is the holy grail. The median gross margin of the companies above was 72%.

Revenue Growth Benchmarks for Consumer Tech Startups

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Below is a link to the consumer growth calculator. Simply type in your annual revenue and it will display the 90th, 75th, 50th, and 25th percentile forward growth rates.

*** CLICK HERE FOR THE CONSUMER GROWTH CALCULATOR ***

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The group of consumer companies that crossed the 90th percentile mark during their hyper-growth phase includes:

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Combined, these 19 companies represent over $575 billion in market capitalization, largely dominated by Facebook representing 80% of the total. It is worth noting that several of the consumer companies above have faltered as public companies, namely Snap, Blue Apron, Groupon, and LendingClub. This highlights the importance of achieving high growth while also building a defensible business model and one with sustainable unit economics at maturity.

Final Thoughts

“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 Combinator

About IVP: With $7 billion of committed capital, IVP is one of the premier later-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 is one of the top-performing firms in the industry and has a 37-year IRR of 43.1%. IVP specializes in venture growth investments, industry rollups, founder liquidity transactions, and select public market investments.

parsa.vc

Investor at late-stage VC firm, IVP.

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