Founders project $0 to $1M in annual revenues within 24 months
This article is an extract from an article published on Equidam.com
Building a startup into a sustainable business requires multiple years of commitment. But how do founders see this roadmap? When do we expect the company to be generating revenues? How steep should the proverbial hockey stick be?
Creating and presenting revenue forecasts to investors is always tricky. Too high and they will not be believed, too conservative they will lower the interest of the other party.
The lack of knowledge on how founders see the future stems out of the little data about startups financial projections. The case of pre-revenues companies and over-optimism is an interesting one. Projecting financial performance when the company might not even have a product yet is complex. So is the over-estimation just a reflection of its complexity?
To counteract this phenomenon we looked into the forecasted time from zero revenues to $1 million in annual revenues.
We first looked at the projected time to $1m revenues per country. Interestingly enough, across 5 of the largest startup ecosystems - United States, India, Israel, UK and EU – founders’ ambition and time to $1m revenues are very stable around the 23 months average. There are however differences. US startups show higher ambition and forecast the timeframe to 21,21 months on average. Israel is the most conservative of the studied countries with 24.34 months.
Breaking down the values by industry gives us more insights into common timeframes. More enterprise-focused industries like Aerospace, Chemicals or Airlines expect shorter timeframes, around 18 months. Consumer facing companies n competitive industries like luxury expect to reach the $1m target in 43 months, with research leading the whole group at 60 months.
About The Data
The data used in this article comes from the Equidam database. Equidam is the pioneer in online automated valuation for startups and private companies. As part of its activity, Equidam collects financial projection data from users, that can never be shared unless aggregated, and uses it to accomplish its mission of increasing valuation objectivity and accessibility.
The dataset surveys more than 15000 companies in 78 countries, spanning from very early stage and pre-revenues startups to VC backed or more traditional companies.