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From $0 to $1M: The New Gold Standard for Growth


    It was a typical Tuesday and as I was scanning through my Twitter feed, I came across an interesting post. Gokul Rajaram stated that ARR growth rates weren’t what they used to be and instead have been reset at much higher rates.

    The New Gold Standard for Growth - tweet image

    Tripling from $1M to $3M ARR in a year was no longer the “Gold Standard” and instead, top-performing companies were rocketing from $1M to $5M ARR in the same period of time. This concept of tripling at $1M ARR has been written about extensively and used as the first step in Neeraj Agrawal’s post on Triple Triple Double Double Double (or T2D3). I wanted to know whether that 5x figure was correct and if so — have growth expectations changed?

    So, using Scale Studio’s data on thousands of quarters for hundreds of companies at $1M ARR, we went back in time and looked at what top-decile growth rates have looked like over the past several years for $1M ARR companies. (As an introduction – or refresher – on Scale Studio, it is our analytics platform that we use for analyzing and benchmarking startup performance. You can read more here.)

    Two things came out as truths:

    • Historic Triple Confirmed: It is a fact that top-decile companies have historically, from 2013-2020, grown 3x in 12 months once they hit $1M ARR.
    • The Growth Rate Reset: It’s also a fact that, in the past year, top-decile companies have grown 5x in 12 months once they hit $1M ARR. This is the new gold standard for growth at that scale.

    The New Gold Standard for Growth - 5x chart

    This data is useful to your annual planning for 2022. If your goal is to attain top-decile growth in 2022, the bar is officially higher — and along with it, so are investor expectations. On the flip side, the 5x club is a very exclusive one given the historically high growth required for membership. It comes with bragging rights.

    Read more about the trends in $1M startups in “Seed to Series A” on our blog.

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