Revenue & Profit Growth
5
Answers
Entrepreneurial Executive, Been a Founder
100M+ in revenues in 5 years or less does not happen very often.
As an example of one sector, here is an interesting data visualization (circa 2008) of the 100 largest publically traded software companies at that time that shows their actual revenue ramp-ups from SEC filings (only 4 out of these 100 successful companies managed this feat, which themselves are an extremely small percentage of all of the VC-funded software companies):
How Long Does it Take to Build a Technology Empire?
http://ipo-dashboards.com/wordpress/2009/08/how-long-does-it-take-to-build-a-technology-empire/
Key findings excerpted from the link above:
"Only 28% of the nation’s most successful public software empires were rocketships. I’ve defined a rocket ship as a company that reached $50 million in annual sales in 6 years or less (this is the type of growth that typically appears in VC-funded business plans). A hot shot reaches $50m in 7 to 12 years. A slow burner takes 13 years or more. Interestingly, 50% of these companies took 9 or more years to reach $50m in revenue."
Answered about 11 years ago
Founder at WP Engine
There isn't a lot of data on private companies, but here's some rules of thumb for you.
First, most VC-funded startups *never* make it to 100m+ revenue, ever. I'm unclear whether your question is "of the number which do make it, how many make it within 5 years?" or whether it's "of total investments, how many both make it to $100m+ and do so in under 5 years."
SaaS companies now are IPO'ing on less than $100m/yr in revenue anyway (e.g. Marketo), certainly having been around longer than 5 years. So, successful companies (from a VC perspective) don't need to grow as quickly as that anyway per se.
It's very hard to get to that revenue level that quickly. The reason is that early on revenues typically grow slowly, then kick up if the company has reached its stride in both marketing/sales and size of market. But that burns 1-2 years of low revenue.
You might be a $1m-$5m/yr in run-rate revenue after, say, 2 years. Now maybe you're growing fast. A very fast revenue growth rate (not "active users") is 3x/yr, maybe 5-7x/yr if you're starting at $1m -- few companies in the $1m-$5m range ever grow faster. But that only gets you to $15m run-rate by year 3, even at the top end of that range.
Even if you're even more generous and call it $20m run-rate at end of year 3, to get to $100m run-rate in year 5 requires something like 2.5x growth in year 4 ($50m) and then 2x in year 5 ($100m).
But wait, "run-rate" isn't "revenue." And when you're growing that fast, actual revenue in the year is much less than your ending run-rate. So actually we're still not at $100m revenue.
So the bottom line is this almost never happens. It still almost never happens on a run-rate basis.
P.S. My company WP Engine is in fact a company on the top end of this sort of growth rate, so I've seen this first-hand in the past 3.5 years. I see what investors say about our growth rate, and whether they say this is typical or atypical. I also see the challenges it creates internally due to human scale, and I know that growing much faster would probably rip us apart from the inside.
Answered about 11 years ago
Clean Energy. GreenTech. Water. Agriculture.
I have been in the money business as a VC and an advisor for over 20 years. Growing from zero to $100 million is slightly more common in Silicon Valley than anywhere else, especially if the companies are backed by top tier VCs. Even so, I would estimate that the number of venture backed companies that go from zero to $100mm in under 5 years is under 5% of the total number of venture backed companies across the country. If you would like to discuss this further, please feel free to get in touch.
Answered over 9 years ago
🌎Harvard Certified Global Corporate Trainer🌍
Only 0.04% of companies founded each year achieve $100 million in annual sales. It can be seen in the following statistic in 2012. As of 2012, there were around 6 million companies in the U.S.
revenue range – – number of companies
$0 to $25M -- 5,640,800
$25M to $100M -- 62,968
$100M to $250M -- 211
$250M to 500M -- 572
$500M to $1B -- 1,069
$1B to $2B -- 500
$2B to $5B -- 152
$5B to $10B -- 53
More than $10B -- 27
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Answered about 4 years ago