Prioritising profitability – for your investors, and for your business

29 April, 2024 | insight
A good lesson for founders striving for success, businesses have to make money to survive and to succeed

As a corporate investor that backs growth-stage businesses with operational capital as part of a funding round, we have always advocated for good business fundamentals just as much – and in fact as a priority – as the focus on burning through investment just to achieve unsustainable growth.

Here’s a good reality check for founders striving for success. Businesses have to make money to survive and to succeed, and investors are increasingly losing patience with the tried, tested (and often failed) attitude of ‘growth through negative burn’. In a recent survey of founders at the time of writing this article, 84% said they were under more pressure (from their investors) to prioritise profitability. An unsurprising sentiment given the tighter early stage investor landscape – it will be interesting to know what others think?

The upside being that founders have mostly followed that advice, with 64% having cut back on new hires and 57% trimming staff costs; and 49% have also made savings on office costs.

Increasingly founders have said they’d like more help with fundraising and industry connections and customers, which is exactly the strategic support we believe investors, whether cash or corporate in their model, should focus on when backing growth-stage companies.

The survey also found that 71% of startup founders feel like their relationships with their investors have gotten worse, not better over the past year with 44% of founders acknowledging that many VC investors were not helpful when it came to business strategy – meaning that founders, often first-time leaders, are left unsupported in executing on the growth initiatives that all stakeholders have ultimately bought into by backing the business. It’s high time that founders and funders alike leverage the real value of ‘better together’ when scaling for success.