June 6, 2022
At ProjectionHub we help entrepreneurs create financial projections for potential investors and lenders, and we are commonly asked whether a set of projections seem “reasonable.” Of course, it is impossible to say whether any set of projections are realistic because you never know when you are looking at the next Tesla. No one would have considered it reasonable that Tesla would generate $50 billion in annual revenue in 2021 back in 2010 when the company was just getting started, and yet Tesla did generate over $50 billion in revenue in 2021.
Even though we don’t know what kind of revenue any single startup might generate, we realized that we could analyze what other startups are projecting and at the very least tell our founders whether they were projecting much more or much less than other similar startups that are looking to raise capital.
So we partnered with STORY Pitch Decks to analyze the financial projections of 107 of our clients to get a clear idea of what tech startups are projecting in terms of revenue and profitability. The following graphs and charts are the findings from our study:
How High is Too High - Tech Startup Revenue Projections
We are going to start with the conclusion of our study. We defined “realistic” projections as a deviation from the norm. We determined that if your startup projections are more than 3x higher than what the average revenue projection was for your business model and stage, then your projections are probably unrealistic.
So once you create a set of projections (60+ CPA prepared financial projection spreadsheets), compare your projections to the following, and if you are higher, you are probably unrealistic:
Tech Startups Analyzed by Stage and Business Model
The following graphs display the breakdown of the 107 tech startups in our study by business model type and stage of business.
Typical Projected Growth Rates for Tech Startups
The following graphs and tables provide projected growth rates for the 107 tech startups in our study. This is broken down by business model type and stage of business.
Average Amount of Investment Being Raised by Tech Startups
We broke down data related to the amount of investment sought by companies based on stage and business model type.
Revenue Projections for Tech Startups
The following graphs and tables display the projected revenue for our 107 startups by stage of business and business model type.
How Long Does it Take a Startup to Breakeven
The following data shows how long it is projected to take for tech startups to breakeven based on their own financial projections.
Our hope is that this data has given you the information you need to provide a gut check on whether or not your financial projections are reasonable. If you need a good starting point for your projections we have a great template for each of the 4 types of startups which you can grab below:
- B2B SaaS Financial Model
- B2C SaaS Pro Forma
- Marketplace Financial Projection Spreadsheet
- eCommerce Startup Financial Model
If you need any help, don’t hesitate to contact us!