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Lessons from startups that reached the $1B revenue threshold

Once upon a time, reaching a $1 billion valuation was a Big Deal. But the shine that a so-called unicorn valuation conferred on a startup eroded as more and more private companies reached the threshold — often with less and less to back it up.

TC, where the term “unicorn” was born, noted the dilution of the denomination by working to collect notes instead on startups that had reached a $100 million revenue run rate, often measured in the form of annual recurring revenue, or ARR.

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That project was continued by a venture capital firm, dubbing startups that reached the nine-figure revenue mark “centaurs,” for obvious reasons. The refocus was useful, as there was more to learn from startups that reached $100 million in revenue than those that were awarded $1 billion in valuation.

But what about former startups that reach 10 figures of revenue? What can we learn from them?

Friends & Family Capital (multi-stage, mostly focused on companies with eight-figure revenue growth at 80% or more) ran an interesting analysis of private companies that sought to find out. Friends & Family compiled its findings into a report that I recently digested. TC also spoke with John Fogelsong and Colin Anderson from the firm about what they learned from the data.

The result is a series of notes about startups that don’t stop at $10 million or $50 million worth of revenue before they sell to some larger firm. Here’s how the biggest private-market companies got there.

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