Checking In On Startup ARR Growth

Morning Markets: Here’s how fast a bunch of companies grew recently. 

It’s VMworld week here in San Francisco which means that the city is awash in enterprise tech. Some companies are making hay while the event happens, announcing news while their audience is gathered.

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Platform9 is one such company, reporting this morning that it has closed a $25 million Series D round of funding. The company works in what it calls “SaaS managed hybrid cloud and container orchestration,” which I think means that it sells subscription software to help customers manage their on-premises and cloud architecture, and also translates pop container tunes into orchestral settings.

Something like that. But aside from the round (NGP Capital led, Mubadala Ventures took part, and prior investors including Menlo and HP’s Pathfinder invested more), the company’s performance caught our eye. As part of its funding announcement, Platform9 reported that it recently “[drove] revenue growth of 130 percent in [annual recurring revenue, or ARR] and 156 percent in [total contract value, or TCV] bookings compared to the previous year.”

Given that I keep banging the drum for startups to report growth metrics in their funding releases, how could we not note the metric from Platform9?

The numbers got Mary Ann and me thinking. What other ARR results have we heard recently that we could share? So, we compiled a few. Here’s what we could dig up:

  • ScaleFactor, which we covered here, recently indicated during its $60 million round that its ARR grew 700 percent last year. That’s a lot of darn growth.
  • Axonius, a cybersecurity company and not a new Axe scent, raised $20 million this morning, announcing 400 percent ARR growth “in 2019 alone” which could make the growth rate a partial-year figure.
  • A little while ago in July TrustRadius announced “recurring revenue” growth of 223 percent when explaining its $12.5 million Series C.

From there, we had to go back a bit further in time. Asana announced eight quarters of accelerating revenue growth to cross the $100 million ARR mark last year. Podium and Weave are growing like mad. Ivalua claimed to be “on pace” to surpass $100 million ARR this year, and so forth.

Recalling our thoughts yesterday about what a startup is, these growth rates are the sort of things we love to see shared.

Now, not every company can grow at several hundred percent per year. And, since we often don’t know a firm’s starting revenue figure, some growth rates can wind up less impressive in reality than they appear in the abstract; its much easier to grow on a percentage basis when you are starting from a low base.

All this rolls up to a VC metric that you’ll hear a lot in startup circles. The “triple triple double double,” an expectation that companies triple in size twice over a two year period, and then double twice more over the next two years. You can see how the revenue stacks in such cases. Start with, say, $3 million in revenue and by the end of a TTDD you’ll be at $108 million.

Start with $5 million in top line and you’ll wind up with revenue of $180 million by the end.

Investors care about revenue growth for much the same reason that we do, they are a cognate for value creation. Roughly the faster a company is growing the more money it is worth for a firm of its present size, and, also, the faster that it is accreting value to itself.

Share Your Growth Rates With Me

Growth metrics are good metrics and we’d like more of them, please. If you are a startup and want some Easy To Get media coverage, send in your H1 2019 ARR growth (compared to H1 2018) to and if enough people write in, I’ll post the lot.

Illustration: Dom Guzman

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