What is a High Growth Company? When someone says ‘high growth company’ they immediately tend to think of classic venture capital focused businesses like technology companies, biotech and software. But reflecting on our experience, more than half of high growth clients came out of traditional, often boring old industries, like manufacturing, business services and distribution.
Our experience though is not unique to the broader picture. Attesting to this, a Washington think tank organization, the National Commission on Entrepreneurship published a report entitled “High Growth Companies: Mapping America’s Entrepreneurial Landscape” in July 2001. The report was based on their exhaustive review of US employment data for companies in business from 1992 to 1997. While their threshold was based on 15% (rather than 20%) growth and driven by employment growth rather than revenue growth, their findings still are very applicable and valuable.
A few key findings on High Growth Companies taken from that survey:
1) “High Growth companies are truly extraordinary in the economy; fewer than one in twenty U.S. businesses achieve high-growth rates . Only 4.7% of all companies that existed in 1991 grew their employment base by at least 15% per year from 1992 to 1997.”
2) “High Growth Companies are found in all regions of the country, often concentrated in the most surprising areas.”
3) “Most fast-growing entrepreneurial companies are not in ‘high-tech’ industries. Flying in the face of conventional wisdom high companies are found in high-technology industry sectors… data shows high growth companies are widely distributed across all industries.”
While this is only a portion of the study, the value of knowing future growth is available to all companies is a pretty powerful and encourage thought. It makes me further believe that growth over the long term is driven by management’s own ability and vision more so than picking the right industry which few of us have the luxury of doing anyway.
About Lantern Capital Advisors
Financing Gazelle is the corporate finance blog of Lantern Capital Advisors, a corporate finance consulting firm that prides itself on unparalleled service and performance.
We are committed to providing unbiased advice and prudent strategies raising capital for high growth companies or “Gazelles”. Our corporate finance consulting services are always tailored to your unique business needs. Lantern Capital Advisors provides growth capital, management buyout, and acquisition financing strategies for our clients by accessing the capital markets on their behalf.
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