When I ask founders about their competitors’ revenue they often answer that they cannot find this data for private companies. You actually don’t need to know the exact number, but you can make a decent estimate based on the digital footprint your competitors leave on the Internet. You can also use the tips presented below to estimate the market share of your competitors. Today, I will show you how to use LinkedIn, Craft.co, and Growjo.com to estimate startup revenue. I will also discuss how you can figure out if your competitors face financial challenges. There are additional tools like mattermark.com, and zoominfo.com, but I don’t use them often.
Calculate startup revenue based on the headcount
If two companies employ the same business model and operate in the same sector, they will need more or less the same number of employees to earn each revenue dollar. Jason Lemkin claims that if a startup raises money, then its annual revenue per employee is in the range of $100-$300k. You can multiply the company headcount by $150-200k to get the estimated revenue. It’s a good estimate for Series B+ companies, while for early stages it’s usually lower. I also double-checked this approach on a number of our portfolio companies, and I got a pretty decent match. Now we just need to figure out the company headcount.
Given the headcount dynamics you can also estimate the monthly revenue and improve your annual revenue estimate accounting for the month-over-month growth. More importantly, the headcount dynamics are an early indication of your competitor’s problems. For example, if your competitor raises a smaller investment round (compared to a previous one), and the company headcount stays flat or decreases - it is an indication of problems and cost-cutting. In addition to that, you can see if there is a decrease in their website visits via Similarweb.
Tool #1: LinkedIn for revenue estimation
85% of white collar workers keep their LinkedIn profiles updated. You can get headcount data for free from LinkedIn company pages (see Fig. 1). As a data geek, I validated this hypothesis on ~90 public companies in the Healthcare sector. The correlation between the headcount on LinkedIn and the headcount reported on Yahoo Finance was really impressive!
If you have one of LinkedIn’s pro accounts, like the Sales Navigator, you also have access to headcount dynamics where you can see if your competitor is growing fast, stagnating, or facing other problems (see Fig. 2). By the way, you can always get a free 30-day trial for one of LinkedIn’s pro accounts. That should be sufficient for one to complete the analysis.
Of course, this method doesn’t work for companies operating in stealth mode. Luckily for us, those are usually pre- or early revenue startups. By the way, today many VCs parse company LinkedIn profiles to find signals for early growth. There are also numerous services that perform this scraping and analysis. If you plan to raise money, you’d better keep your company’s LinkedIn profile updated.
Tool #2: Craft.co
You can also explore the headcount dynamics with a free version of craft.co. You just need to type the name of the company and click on the competitor tab (see Fig. 3). You can also compare it to other companies in the sector. UrbanFootprint profile on craft.co has 53 employees compared to 58 on LinkedIn because craft.co does parsing on a monthly basis. What I also like about craft.co is that they automatically build a comparison table for competitors including funding rounds, financials, founding dates, etc.
Tool #3: Growjo.com
You can also use a free version of Growjo. For example, in case of UrbanFootprint it estimates the headcount to be 61 employees (+24% growth last year), $7.8M annual revenue, and $128k revenue per employee. You can also see statistics on the closest competitor (see Fig. 4). The headcount and funding is a bit different from what we find in LinkedIn and Crunchbase. Keep in mind that the data could be outdated sometimes.
Key takeaways
Even if your competitor is a small private company you can reliably assess their revenue metrics, find early indications of problems they face, and use this information for the benefit of your business. For example, during the lock-down we used this method to assess how the target companies were doing prior to COVID-19, and compare their dynamics against their peers. Some of them were growing while others were cutting their headcounts. I hope the article was helpful. Good luck with your business!