We looked at the revenue growth of 146 tech companies prior to going public to see how fast you need to grow prior to IPO/exit. Data is below.
The “S1 filing” is the year the company filed their S1; an S1 is like a prospectus every company must file prior to going public and it contains full year financials. Observations are below.
SaaS. Software companies posted median revenue of $106mm in the year prior to going public with 55% median growth. The range of growth was wide: the minimum level of growth was 6% by Survey Monkey, while the highest growth rate was Horton Works at 587%. The median level of revenue needed to go public has increased over time. For companies that filed their S1 in 2019, 2018, 2017, 2016, and 2015, median revenue levels each year were $219mm, $193mm, $134mm, $128mm, and $129mm. Alternatively, the median levels in 2012, 2011, and 2010 were only $87mm, $81mm, and $45mm. The bar to go public/exit is rising.
Social Media. Social media companies had median revenue of $361mm with 151% revenue growth prior to IPO.
Marketplaces. Marketplaces had $202mm of revenue on median and 53% and 67% revenue growth in the years leading to IPO. Uber and Lyft are major revenue outliers though, with revenue of $11.2bln and $2.1bln respectively. Lyft’s revenue growth was exemplary at 104%.
E-commerce. On median these businesses had $282mm of revenue prior to going public with consistent growth of 70% in the years prior. It’s pretty incredible to think that Amazon went public with only $16mm of revenue, but that was actually a lot of revenue for a new tech company in the 90’s. Chewy alternatively had $3.5bln revenue at the time it went public earlier this year.
The themes that seem to repeat are that prior to exit, growth either needs to be consistent in prior years or if it’s declining, it needs to still be quite high – for instance Ad Based had revenue growth of 131% 2 years prior to IPO and 73% prior to IPO so while there was a decline, 73% was nothing to sneeze out. The data should also give you a sense that the amount of revenue needed to go public has increased dramatically over the past two decades.
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