April 8, 2022
When our startup clients are working on financial projections, a common question is how much revenue should I expect to generate per employee? Said another way, how much revenue should I have before I hire an additional employee?
Of course, the answer is that it depends, but we were able to gather real world data and published our findings in our report Startup Revenue Stats: A Study of 234 Tech Startups .
Now I am going to dive into the findings and the key takeaways as it relates to revenue per employee for startups.
About the Startup Revenue per Employee Study
Specifically, we analyzed tech startups in the following categories:
- B2B Software Startups
- B2C Software Startups
- D2C Product Startups
- Marketplace Startups
We were able to pull data from StarterStory case studies for 234 tech startups broken down as follows:
The startups were categorized into the following stages:
- < 2 years old
- 2 Years to 4 years old
- > 4 years old
Lastly, we were able to estimate whether the company had raised capital or if it was bootstrapped.
Revenue Per Employee at Startups
Here is what we found:
Revenue per employee by business type and bootstrapped vs. raised capital
The graph below shows the average revenue per employee for each of the 4 business types and then also breaks it down to show the difference in revenue per employee for bootstrapped companies vs. companies that raised capital.
Average revenue per employee by business type and stage of business
The graph below shows the average revenue per employee for each of the 4 business types over time. It breaks down the average for each of the 3 stages (< 2 years, 2 to 4 years, >4 years).
We also looked at breaking out the data in a few more ways for specific business types:
Average Revenue per Employee for B2B Software Startups
The graph below shows the average revenue per employee for B2B software startups over time and broken out between those companies that raised capital vs. those that bootstrapped.
Average Revenue per Employee for Marketplace Startups
The graph below shows the average revenue per employee for Marketplace software startups over time and broken out between those companies that raised capital vs. those that bootstrapped.
Average Revenue per Employee for Direct to Consumer Startups
The graph below shows the average revenue per employee for Direct to Consumer Product startups over time.
4 Key Takeaways on Startup Revenue per Employee
Based on the data, we found 4 really interesting takeaways.
- The Average D2C Startup Generates 2.5x the Revenue per Employee Compared to Software Startups - D2C product startups averaged over $550,000 in revenue per employee while B2C, B2B and Marketplace software companies averaged approximately $200,000. This is due to the fact that D2C companies have significant variable expenses for the product cost, labor cost, shipping costs and warehousing costs; whereas, a software company has much higher gross profit margins which allows them to hire more employees per dollar of revenue.
Dig into more interesting D2C Startup Stats in our report - Direct to Consumer (D2C) Product Startup Revenue Stats: A Study of 99 D2C Product Startups 
- Bootstrapped Startups Generate 5x the Revenue per Employee compared to Startups that Raised Capital - On average, bootstrapped startups generated approximately $400,000 in revenue per employee compared to $75,000 per employee for startups that raised investment. This is due to the fact that the investment allows a company to hire more employees faster and operate at a loss for longer during the early years.
- The Average Revenue per Employee Increases the Older the Company Gets - For example, the average revenue per employee for a D2C company that is less than 2 years old is $223,000, but increases to $549,000 for D2C startups that are between 2 and 4 years old.
- Software Startups Generage $200,000 in Revenue per Employee - All three software startup types (B2C, B2B, and Marketplaces) generated roughly $200,000 in revenue per employee. On the high end, we found a couple of B2B software companies that generated $1.7 million and $1.5 million in revenue per employee. Interestingly, the $1.7 million company has 35 employees, while the other company only had 1 single employee!
We hope this research really helps you as you work on creating your own financial projections. You can check out our financial projection templates for each of the industry types below:
- Marketplace financial model template
- D2C Product financial projection template
- B2B Software financial projection spreadsheet
- B2C Software financial forecast template
Let us know if you have any questions and contact us at firstname.lastname@example.org!
Photo by Tima Miroshnichenko