Monday, April 30, 2012

How Much Revenue Does It Take To Be A $1B Public Company?

1billevilWith all the chatter about Billion dollar valuations -- like Instagram, Evernote, Splunk -- combined with recent S1 filings and IPOs, the topic of tech company valuation is coming to the forefront of people?s minds. Specifically related to the software industry, the growing number of SaaS IPO candidates of late is signaling an important shift in the way that enterprise software is built and sold. It also indicates that the subscription business model is here to stay. What does this shift towards a subscription economy means for startups, investors and the IPO landscape? First of all ? get Instagram out of your mind. The price it sold for is not relevant to us mere mortals who are building B2B software businesses. For all good, non-bubble reasons, SaaS companies need tens of millions in revenue, high growth, and solid business fundamentals. What you may notice though, is that revenue may be lower than what we?ve become accustomed to during the last few years of IPO drought.

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