May 01, 2018
The fourth-annual Edison Partners Growth Index benchmarks the performance of growth-stage technology companies and the actions they take to drive fast, scalable growth
Edison Partners, a leading growth equity investment firm, today announced the results of its fourth annual Growth Index. The 2018 Edison Partners Growth Index distills and prescribes characteristics, practices and best-in-class methods associated with fast-growing, growth-stage technology companies.
“As we have discovered in previous years and validated again this year, the central driving force for Fast Growers is go-to-market alignment executed with excellence and coupled with financial discipline and investment,” said Kelly Ford, Partner, Edison Partners. “The benchmarks and advice offered in our Growth Index enable CEOs and their management teams to see how they score against their peers and map their own journey to becoming a Fast Grower.”
This year, eight distinct traits of Fast Growers emerged:
No. 1: Invested 70% more than peers in sales and marketing as a percentage of revenue. They spent 25% of revenue on sales and 15% on marketing.
No. 2: Commanded 3x higher average selling prices. They had diversified product sets, multiple pricing levers and optimized packaging to capture more value per customer.
No. 3: Closed pipeline 2x faster. They had stronger qualification and discovery practices that positively affected conversion across the funnel, while peers gave sales teams more time with less-qualified leads.
No. 4: Retained more dollars. Their net dollar retention rates were nine points higher than slower growers.
No. 5: Expanded gross margins at higher rates. They emphasized higher-quality product revenue over service revenue.
No. 6: Hired more and faster. Their headcount grew by 55% and followed visibility into new bookings and retention growth.
No. 7: Ramped revenue per employee at a greater than 3x rate. Their revenue growth outpaced headcount growth for the year.
No. 8: Absorbed higher bottom-line losses. Their losses were commensurate with capital requirements and demonstrated responsible growth.
The Edison Partners Growth Index is a program of the firm’s Edison Edge value-add platform, which provides portfolio companies with operating leverage, executive education, and the largest board director network and development program in the country. The survey was conducted during February 2018 and focuses on characteristics common in companies with 2017 GAAP revenue growth rates of 30% or higher. More than 40 Edison portfolio companies from fintech, healthcare IT and enterprise solutions industries participated in this year’s study. These are companies, ranging $5 million to more than $50 million in revenue, that have moved beyond startup mode and are focused on not only on topline growth, but also market expansion growth with long-term competitive scale.
To download the Edison Partners 2018 Growth Index please visit www.edisonpartners.com/2018growthindex
About Edison Partners
For more than 30 years, Edison Partners has been helping CEOs and their executive teams navigate the entrepreneurial journey and build successful companies. Through the unique combination of growth capital and the Edison Edge platform, consisting of operating leverage, the Edison Director Network, and executive education, Edison employs a holistic approach to accelerating growth and creating value for businesses ($5 to $20 million in revenue) in financial, healthcare and enterprise technology sectors. Edison investment objectives also include: buyouts, recapitalizations, spinouts and secondary stock purchases. Edison’s active portfolio has created aggregate market value exceeding $10 billion. Its long-tenured team based in Princeton, N.J., manages more than $1 billion in assets throughout the eastern United States.
