It’s often said that, in order to be considered as a potential investment by VCs, you have to tell a (convincing) story which could potentially catapult your exciting venture to the $100M annual revenues mark (while keeping a healthy margin on the bottom line). But what is the probability in 2021 for a company to reach this $100M threshold? How many companies generate more than $100M per year?
Let’s find out via 3 tools we’re using for business intelligence purposes: Latka, Crunchbase and Apollo.
How many companies listed on Latka make more than $100M per year?
Nathan Latka has compiled with his team a list of 31,413 SaaS companies.
You can apply a range of filters on the list, incl. “annual revenues” (some are verified numbers, most are estimates). If we pick $100M as a minimum for our analysis, we end up with 486 companies out of 31,413, that’s 1.5%. There are 85 companies making more than $1B = 0.2%.
How many companies listed on Crunchbase generate more than $100M in revenues?
Crunchbase is one of the other sources we’re using in our reports. There are more than 1M entries in the global companies list. We can also apply a revenue filter.
We end up with 32,333 companies. We don’t know the exact total amount of companies in the list but let’s assume it’s 1,000,000 to run our quick calculation. This gives us a proportion of 3% making more than $100M per year. By the way, there are $6,020 companies making more than $1B a year, that’s 0.6%.
How many companies listed on Apollo make more than $100M in revenues?
We love the smooth user experience on Apollo.io, another source of business data. There’s a total of 55.7M entries in their company DB, out of which 5.1M include an (estimated) annual revenue. Let’s apply a filter to surface the entities with an estimated annual revenue of more than $100M. We end up with 53,600 companies (out of 5.1M) = 1%. And there are 13,700 companies with more than $1B in annual revenues (0.2%, the same proportion as on Latka, see above).
What’s the global proportion of companies achieving $100M+ in annual revenues?
We can’t tell you for sure how many companies in the world make more than $100M per year but the proportion in the tools we’re using varies from 1% (Apollo, out of 5.1M) to 3% (Crunchbase, out of 1M), with apparently 1.5% of SaaS belonging to the $100M+ club.
Since Apollo features five times more entities than Crunchbase, we could argue that the 1% proportion would probably be closer to the truth at a global scale. But this is only the tip of the iceberg. Indeed, Statista reports that in 2020 there were estimated to be over 213 million companies operating worldwide. If we include in Apollo’s company list the entities with an unknown revenue (recorded on Apollo), we get 55.7M entries (+/- 1/4 of the global total reported by Statista). If we assume that Apollo’s selection features most of the largest companies in the world, the 53,600 companies generating more than $100M per year included on Apollo would represent 53600/213M = 0.02%. If you start a company today, you have 2 chances out of 10,000 to reach the $100M mark.
For comparison purposes, according to the EuroMillions website, the odds of winning the actual jackpot are 1 in 139,838,160. A 2 out of 10,000 scenario (creating a company making $100M per year) is twice more probable than coming up with 4 numbers + 0 stars (1 in 13,811).
That’s the type of deals that VCs would love to identify. But, at the end of the day, 65% of venture deals return less than the capital invested in them (even if most deals were aiming for $100M annual revenues). VC funds need what they call “home run investments” (50x return). There’s no playbook to find those unicorns, except investing in a wide range of startups, most of which will probably tell their own version of the $100M+ story.