High-Growth Startup Valuation and Odds Modeling
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Table 1: How many companies become High-Growth by Metro? [Reference data on tab "High-Growth Statup Odds"]
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Percentile
1 in X is High-Growth
Metros
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90th Percentile643Washington DC, Austin, Atlanta, Columbus, Nashville
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75th Percentile789San Diego, Denver, Phoenix, Boston, Cincinnati, Seattle
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50th Percentile954San Francisco, Orlando, Dallas, Cleveland, Indianapolis, Portland, Baltimore, Philadelphia
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25th Percentile1,294Kansas City, Minneapolis, Charlotte, Chicago, San Jose, Los Angeles, Houston, Miami, Jacksonville
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10th Percentile2,032New York, Virginia Beach, Detroit, Milwaukee, Sacramento, Las Vegas
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Average1,265United States
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Sources: Morelix, Arnobio, and Josh Russell-Fritch. 2017 Kauffman Index of Growth Entrepreneurship. Ewing Marion Kauffman Foundation, pp. 10 www.kauffman.org/kauffman-index/reporting/-/media/e37f4200462347dbb0d385e01e656be2.ashx. “Metropolitan Area Rankings.” The Kauffman Index, Ewing Marion Kauffman Foundation, Oct. 2017, www.kauffman.org/kauffman-index/rankings?report=growth&indicator=growth-rate&type=metro
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Table 2: What is the revenue of a High-Growth Company? [Reference data on tab "High-Growth Startup Revenue"]
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PercentileYearly RevenueBusiness Age
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90th Percentile$65,000,000Average age of startups in this bracket is 16 years old
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75th Percentile$26,000,000Average age of startups in this bracket is 10 years old
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50th Percentile$10,000,000Average age of startups in this bracket is 5 years old
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25th Percentile$5,000,000Average age of startups in this bracket is 2 years old
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10th Percentile$3,000,000Average age of startups in this bracket is 1 year old
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Average$37,000,000Average age of startups in this bracket is 8 years old
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Source: Hathaway, Ian. “High-Growth Firms and Cities in the US: An Analysis of the Inc. 5000.” Brookings.edu, The Brookings Institution, 5 Feb. 2018, www.brookings.edu/research/high-growth-firms-and-cities-in-the-us-an-analysis-of-the-inc-5000/.
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Table 3: What is the revenue multiple to value a company? [Reference data on tab "Valuation Multiples Raw Data."]
Table: Top industries by EBITDA multiple. This is not used in the Warrant Model. It is based on the tab called "Valuation Multiples Raw Data."
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Percentile
US: MVIC* to Revenue
IndustryPercentile
US: MVIC to EBITDA
Industry
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90th Percentile3.0Software, Internet Software & Services, Health Care Equipment, Semiconductors90%19.4Software, Health Care Equipment, Internet Software & Services, Semiconductors
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75th Percentile2.4Communications Equipment, Gas Utilities, IT Services, Energy Equipment & Services, Technology Hardware & Equipment, Biotechnology, Electric Utilities, Technology Hardware, Storage & Peripherals75%14.2Beverages, Communications Equipment, Biotechnology, IT Services, Aerospace & Defense, Technology Hardware & Equipment, Industrial Machinery, Technology Hardware, Storage & Peripherals
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50th Percentile1.9Beverages, Specialty Chemicals, Chemicals, Wireless Telecommunication, Construction Materials, Pharmaceuticals, Integrated Communication Services, Health Care Services50%12.1Energy Equipment & Services, Pharmaceuticals, Household Products, Food Products, Specialty Chemicals, Health Care Services, Chemicals, Publishing
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25th Percentile1.3Aerospace & Defense, Diversified Chemicals, Metals & Mining, Industrial Machinery, Household Products, Food Products, Railroads, Paper & Forest Products, Publishing, Textiles, Apparel & Luxury Goods, Commercial Services & Supplies, Road & Rail, Restaurants25%10.8Textiles, Apparel & Luxury Goods, Construction Materials, Gas Utilities, Railroads, Restaurants, Household Durables, Cable & Satellite, Commercial Services & Supplies, Leisure Products
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10th Percentile1.2Household Durables, Cable & Satellite, Leisure Products, Broadcasting, Auto Parts & Equipment, Multiline Retail10%7.8Road & Rail, Electric Utilities, Broadcasting, Diversified Chemicals, Metals & Mining, Auto Parts & Equipment, Multiline Retail
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Average2.0Average13.1
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* MVIC = Market Value of Invested Capital
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Sources: Valuation Insights: Second Quarter 2018. New York: Duff & Phelps, 2018. Online. Page 9 www.duffandphelps.com/-/media/assets/pdfs/publications/valuation/valuation-insights/q2-2018-valuation-insights.ashx?la=en. “Sector Performance from S&P 500 Indexes.” S&P Capital IQ, 25 Nov. 2018, https://www.capitaliq.com/CIQDotNet/IndustryIntelligence/industryAnalysis.aspx
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