The Single Biggest Determinant of Startup Valuations at IPO

Analysis of 2013 tech IPOs reveals that revenue growth rate is the dominant factor explaining enterprise value (correlation 0.51), while profitability has zero correlation with valuation. The author demonstrates that growth-stage startups command premium valuations regardless of profitability, with the average 2013 IPO growing at 162% annually while operating at -20% net margins. This growth-at-all-costs valuation dynamic trickling down from public markets is reshaping early-stage venture investing.