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Tech Staff Sizes Still Aren’t Rising Much, But Valuations Sure Are

For a few years now at Crunchbase News, we’ve been tracking the relationship between a tech company’s valuation and the number of people it employs.

Consistently, the finding has been this: Recently public tech companies have gotten much bigger in terms of valuation, but not so much in terms of staff size.

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For our latest analysis, we looked at a sample set of primarily venture-backed, software-focused businesses that went public in the past eight months. We use a self-invented metric, valuation-per-employee1, or VPE, to measure the relationship between valuation and staff size.

Overall, we found that for newly public companies with multibillion-dollar market values, disclosed staff sizes ranged from a low of 336 full-time employees (Austin-based DISCO) to a high of 4,130 (Silicon Valley-based Freshworks). We also found several examples of companies with around 1,000 employees or less cinching market caps above $10 billion, including Roblox, Marqeta, SentinelOne and Bumble.

Lean, high-valuation machines

Roblox ranked as the company with highest market capitalization relative to staff size, with a roughly $48 billion market cap and just under 1,000 employees, per its last disclosure. That works out to a valuation-per-employee of around $49 million.

That’s not a metric other tech players will find easy to replicate. It results largely from the Silicon Valley company’s model of building content through a community of developers–some 9.5 million by Roblox’ estimate–who are not on its employee payroll. 

Still, a number of other recent public market entrants also built up impressively high valuations without a huge number of full-time employees. We lay out 18 of them in the chart below, looking at their latest market cap and most recent known staff size:

To see how these numbers compare to cohorts of recently public companies over different time spans, you can check out our charts, one from three years ago and another from January of this year. Below are a few observations from the latest list:

These numbers have ballooned in the past three years: When we first did this survey in late 2018, software companies with successful IPOs commonly were valued around $1 million to $4 million per employee. High-valuation tech companies today commonly fetch valuations equivalent to $10 million or more per employee. This was true in late January, when we last checked, as well as today.

Some of these companies are very picky hirers (we’re looking at you, Duolingo): Companies that sustain high valuations with comparatively small staff tend to be pretty picky about who they hire. One standout on the latest list was Pittsburgh-based language learning platform Duolingo, which states in its IPO filing: “We have a very selective recruitment process: we hire one out of every 353 applicants.” The company also touts an offer-to-accept ratio of 85 percent for industry hires.

Most top performers are roughly the size of a typical American high school: Recently, public software companies that secure multibillion-dollar valuations tend to have at least a few hundred employees and rarely more than 3,000. That’s true for the latest list, of which customer engagement software provider Freshworks is the only one above that mark.

Several have mostly non-U.S. employees: The companies on the latest list are all U.S.-headquartered. But that doesn’t mean their employees are. At Austin-based dating app Bumble, for instance, approximately 600 of its more than 700 full-time employees are located outside of the U.S. as of the end of 2020. London, Moscow and Barcelona are among its major international hubs. And at process automation software provider UiPath, approximately 72 percent of full-time employees were located outside the U.S. earlier this year.

Mature tech companies can have ultra-high valuations relative to staff size too: One might think recently public software companies could sustain higher valuations per employee than more mature players because investors envision more growth ahead for newcomers. But that’s not necessarily the case. Take Google, which was founded 23 years ago and is currently valued around $1.9 trillion. It has around 144,000 full-time employees–working out to a valuation per head of over $13 million.


Market capitalizations from Friday, Sept. 24, 2021, were used for calculations.

Illustration: iStock

  1. Valuation-per-employee is equivalent to a company’s market capitalization divided by the number of known full-time employees as disclosed in its most recent 10-Q, 10-K or S-1 securities filing. It is likely the current staff size is larger than the number cited as these are growth companies that are in hiring mode.

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