$100M+ ARR Centaurs

“Originating from Greek mythology, and much of Roman mythology, Centaurs symbolize masculinity, and are supposed to be brave, loyal warriors”.

When the term unicorn was coined 10 years ago there were only 14 startups with valuations over $1.0B. Today there are over 1,200, 60% of them with headquarters in the US.

To reach the $1.0B valuation mark is still an exceptional accomplishment. But lately we have seen many unicorns suffering, mostly of the “tech-enabled” type, where technology is a means to and not the core of the offering. Typically, the tech-enabled startups, such as Instacart, Klarna, etc, show low gross margins and are transactional-based instead of subscription-based.

So, in order to create a better indicator of startups’ success, Bessemer Venture Partners introduced the “Centaur” status, a new milestone for startups that reach $100M+ in annual recurring revenue (ARR). Obviously, the ARR metric is only valid for subscription-based businesses, notably cloud SaaS.

Centaurs are a rarer species, 7x rarer than Unicorns.

And it takes an 8-year average from founding to reach Centaur status. Importantly, young Centaurs are 2-3 years to an IPO exit, given that the average ARR of IPOed SaaS companies is around $215M. That’s why SaaS VC investors cannot expect a cycle of less than 10 years from seed to IPO.

No doubt Centaur is a better milestone than Unicorn. At $100M ARR, the startup is an undisputable success. It is impossible to build a $100M ARR business without a great product, a tuned organization and happy customers.

Thus, VC money will continue to pour into Centaurs in order to finance the last mile until IPO. Even after the recent market correction, the ≈10x average public revenue cloud multiple is still a powerful magnet to VCs.

Conclusion

Centaurs are rare indeed.

Nevertheless, Fabrica Ventures Fund I managed to put together a healthy herd of Centaurs: Addepar, Automattic, Carta, Checkr, Dataminr, Druva, Exabeam, Flexport, Netskope, Rubrik, SpotOn, Sysdig, Tanium and Tradeshift

Some are already nx ARR Centaurs. Others, such as BigID and FourKites, are rapidly approaching the mythological warrior status. More importantly, though, all of them enjoy the Greco-Roman DNA (source 23andMe ancestry).