Technician in a PPE suit operating a computer machine
A single product can bring overnight success for healthcare start-ups © FT Montage/Getty

Covid-19 threatened to become an extinction-level event for many small and growing companies. Governments scrambled to provide support and businesses in many sectors had to find new ways of operating.

But for those resilient enough to withstand the immediate hit to the economy — and grab new market opportunities thrown up by the pandemic — it turned out to be an unexpectedly fruitful time.

It was also a period of extensive new company formation, as many workers chose to quit their jobs and start something new — an outpouring of entrepreneurialism that may have laid the foundation for an even bigger generation of fast-growing ventures.

This third annual ranking of The Americas’ Fastest Growing Companies reflects the impact on some of the region’s most promising new businesses in the first year of the pandemic. The FT list was compiled with Statista, a research company, and ranks entrants from across the Americas by their compound annual growth rate (CAGR) in revenue, between 2017 and 2020.

Not surprisingly, as the digital took over from the physical for many businesses, the technology sector led the way. Tech companies made up 28 per cent of this year’s list. But many others officially listed as belonging to other sectors, from retail to finance, also relied heavily on a digital business model — a reflection of how tech has spread across the economy.

Digital companies also have the advantage of being free of some of the constraints that limit the pace of growth for other companies, says Ben Narasin, founder of Tenacity Venture Capital, an early-stage investment firm in Silicon Valley. A digital company challenging the traditional banking sector, for instance, doesn’t have to go through the slow and costly process of opening hundreds of branches or filling them with staff.

“Any digital business has the ability to grow at a rate no physical business can,” says Narasin.

Though tech names feature prominently on this year’s list, pharmaceutical and healthcare companies were some of the fastest to reach huge scale. Half of the top 10 companies on the list were involved in these sectors.

The scope for successful new treatments or devices to rake in huge sales after they gain regulatory approval accounts for these companies’ rapid bursts of growth, almost from a standing start.

Axonics, which leads the list, saw revenues explode from almost nothing in 2017 to more than $100mn in 2020 as its new device to control overactive bladder and bowel problems found a ready market.

The sustainability of such growth, however, often depends heavily on the nature of the business partnerships struck in the pharmaceutical world. Revenue at Blueprint Medicines, for instance, leapt from $21mn in 2017 to nearly $800mn in 2020 on the success of new cancer treatments. But the surge was shortlived. In the following year, sales fell back by more than 75 per cent as marketing passed to partner Roche, which assumed responsibility for the product under the terms of an earlier collaboration agreement between the companies.

Other pharmaceutical companies to ride the wave of a significant product launch include Moderna, one of several to develop a successful Covid-19 vaccine. However, this ranking covers the period before Moderna’s vaccine went on sale. In the following year, the company’s revenue soared more than 20-fold, to top $18bn.

Still, the latest list, which covers the three years to the end of 2020, does capture the huge jump in digital activity in the first months of the pandemic, as people around the world were forced to work, shop and entertain themselves online.

Companies that came to symbolise the Covid-19 tech boom figure prominently. Among companies with more than $1bn revenue in 2020, Zoom Communications registered the highest growth rate, thanks to a huge take-up of its video conferencing service in the first months of the crisis. Shopify, whose ecommerce platform has become the foundation for a broad swath of retailers looking to move online, offered a lifeline when customers were trapped at home.

Most investors believe that kind of growth was a one-off: Shopify’s shares have fallen by more than 60 per cent from their pandemic high, while Zoom’s stock is down 80 per cent. But both companies were able to ride the crisis to establish themselves as new leaders in their categories.

Among tech companies, those involved in software dominated the ranking. Thanks to a distribution model that makes it possible to reach vast new markets almost instantly, cloud-based software — also known as software as a service, or SaaS — was well positioned to benefit.

The crisis forced many companies to build an instant digital infrastructure to support their newly distant workers, transforming parts of their operations overnight and fuelling rapid growth at infrastructure software companies. They include DocuSign, whose service enables remote execution of contracts, and Okta, an identity service that makes it easier for people to roam across different applications without the need to sign in multiple times.

Meanwhile, ecommerce, social media and streaming services came to play a much bigger part in their users’ lives. Revenue at MercadoLibre, the Argentine online marketplace company, soared to nearly $4bn, making it one of the standouts among growth companies in Latin America, while furniture retailer Wayfair and handicraft seller Etsy surged in the US.

New companies involved in digital financial services also continued to figure highly among the top growth companies in Latin America, reflecting the region’s relative lack of a developed financial services industry. But, even in the more highly developed US market, fintech boomed.

The fat profit margins of many incumbents in the financial world have made their markets an attractive target for start-ups, says Narasin.

Echoing Amazon founder Jeff Bezos’s famous warning to established companies that “your margin is my opportunity”, Narasin adds: “Fintech companies are attacking that like crazy.”

A notable feature of this year’s list is that it is not only the smallest companies that have been registering blistering expansion. Large-scale growth has been a hallmark of the tech boom of recent years, a phenomenon that was supercharged during the pandemic.

Tesla’s annual revenue went up by $20bn over the three years covered by the list, cementing its place as the first new automobile company in decades to reach mass-market scale. But even that pales compared with Amazon, whose revenues jumped by more than $200bn over the same period — that amounts to more than the entire revenues of the other 499 companies combined in 2020.

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