Here is another question that often gets answered with an “it depends” or a rule of thumb like the Triple-Triple-Double-Double. Not satisfied with either answer, Rory O’Driscoll developed a model called the Mendoza Line to define the minimum growth rate at any revenue level necessary to be on track for an eventual IPO (and see the original article for background on the baseball reference).

We defined “IPO ready” as follows:

Looking at the realistic low bar of what it takes to be a public company, this implies being at run-rate ARR of $100MM at the time of IPO with a forward (next year) growth rate of 25%+.

Factoring in the reality of growth persistence, we derived the line that defines IPO viability at any point in time.

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