Back in 2008 I was on a screening committee helping evaluate angel investment opportunities for a group of investors in town. Once a month we’d meet with 4-6 startups and pick two to present to the group. Well, one of the entrepreneurs delivered his pitch to the committee and did a great job.
Everyone around the table was interested and liked the startup. Then, one of the investors raised his hand and asked about the financial projections. There, on the screen, the entrepreneur pulled up the dreaded slide: $0 in revenue today and $100 million in revenue by the end of year three. Ouch. All the excitement left the room.
Here are a few revenue growth resources for the early startup years:
- Look to S-1 IPO filings for public companies to see their revenues well before being public (e.g. New Relic, HubSpot, etc).
- Research companies on the Inc. 5000 to see a wide range of revenue figures
- Read about Pardot’s revenue in the early years
- Know that Triple, Triple, Double, Double, Double is not normal
The best financial models are built from the bottom-up based on actual metrics from an operating business. While startup metrics can be minimal early on, after a few years they become more meaningful and reasonable financial models with revenue growth can be built.
What else? What are some more thoughts on revenue growth in the early years?