Recently I read about using employee count as a solid proxy for revenues of a given startup. The idea is to look at three factors a) the number of employees found in LinkedIn b) the amount of venture capital raised and c) the recency of the last fundraising round.
Here’s the idea to determine the amount of revenue for a startup:
- Non-venture backed startups: multiply the LinkedIn employee count by $200,000
- Venture backed startup with a recent large round of funding: multiply the LinkedIn employee count by $100,000
- Venture-backed startup without a recent large round of funding: multiply the LinkedIn employee count by $150,000
- Note: if in a more affordable region, like Atlanta, subtract $25,000 from the above multipliers
So, the next time someone ponders how much revenue a startup has, use these simple formulas to generate a directionally correct value, especially for technology startups.
What else? What are your thoughts on using employee count as a proxy for startup revenue?