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Profit vs. Growth?

A lot has been said on this front. Especially from the perspective of early stage startup investors. I wonder what is your opinion on which one really matters at an early stage and why. Would love to hear your thoughts.

31 Replies

Eric Sullivan
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Eric Sullivan Entrepreneur
CEO at FoundationLab
In my experience at least how I have always run my companies has been focused a real combination of the two. We always bootstrapped from start to exit so profit was important for us to grow. I feel that its important for a company to focus on profit as well as growth because if you have someone carrying you round after round, have you ever really built a successful business if it isn't self sustaining. Now this is my personal opinion and if your plan is to build a product and sell it then obviously that's great. But for me personally and the few companies I have sold this has always been a metric that has been important to me.
Robert Hurst
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Robert Hurst Entrepreneur
Robert Hurst, Co-Founder at Audio Network Group
I would advise any founder of an early stage business to do whatever increases your chances of surviving through to the next financing round and securing that cash before the cash runs out.

Never run out of cash !!

Unlike the founder the investors with balanced portfolios are rarely taking the same level of risk as the founders

As an early stage investor taking a punt that the investor can afford to lose the risk profile is often very different from the founders
Ema Chuku
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Ema Chuku Entrepreneur
Designer. Product Developer. Founder @ NuPad
On what grounds? Regardless, it's probably not something of a comparison because both are interchangeable and connected. One triggers the other and vice versa. So for survival grounds and instincts, take the route of the one that's more likely to trigger the other.

If one must chose, then with respect to Early Stage that's self funded, the "Profit route" first makes about sense.




Stephen Campbell, PMP
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Project Management Professional
Yes. With a crystal ball that reads "this business has a bright future," the answer should be Growth.

With a real-life situation, when a business is investable , the answer is still growth.
Investors want starving artists; visionaries want profit.
Thomas Rand-Nash, PhD
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Thomas Rand-Nash, PhD Entrepreneur
Director of Operations & Growth at Brighterion
It will depend on a few factors: (0) the type of company it is, (1) cash on hand vs. burn, (2) revenue per customer vs.customer acquisition costs, (3) ability to raise additional capital assuming not 1 more paying customer in the current funding climate.

Growth alone is not sustainable for 99.9% of companies. That said, some business models and industries require critical mass to ignite the network effect (social networks, 2-sided platforms like Airbnb etc.). However, there should always be a clear path to revenue and profitability. For companies that can earn revenue from customers without a network effect, customer acquisition costs should be kept to an absolute minimum. Of course, this may inhibit growth. However, as the funding climate turns cold, companies without a clear path to profitability will be unable to raise additional rounds while continuing to burn cash on hand.


Dawn Fotopulos
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Dawn Fotopulos Entrepreneur
HiddenProfitProphet.com - I help small businesses find hidden existing profits | Award-Winning Business Author
I'm on a mission to teach the difference between 'growth' of your client base and revenues vs. growth of bottom line and net income. Most SMB have NO idea there's a difference. Millions of them are panicked over the inability to pay the bills, so they're discounting their products and services to get the sale, improve revenues while destroying bottom line. Then they can't figure out why they're working 20 hours per day and not making any money. I'm addressing this with the small business community at Quickbooks Connect in Silicon Valley late October, 2016.
Nedko Nedkov
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Nedko Nedkov Entrepreneur
Brandvertisor: Free Ads Management for Startups
Growth was enough a year ago.
Now everywhere I hear show us revenues and case studies, good team and eventually smooth working beta and you are welcome..
Martin Omansky
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Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Depends. Always good to cover costs and pay dividends, but many investors don't need current income and choose growth and a big equity bump later. Only advice is: life-style businesses should make profits early and often; tech companies, especially those requiring a lot of equity capita, should opt for growth. That said, it is not an absolute rule, and often depends on the preference of the entrepreneur. Sent from my iPhone
Joe Albano, PhD
0
0
Joe Albano, PhD Advisor
Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.
Profit and growth are tools. Think of them like a hammer and a screwdriver. Which you use depends on what job you are trying to accomplish.
Ken Anderson
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0
Ken Anderson Advisor
Director, Entrepreneurial and Small Business Development, Delaware Economic Development Office
Let's be honest. You can grow without profits. Unfortunately, we have less good examples than bad ones of firms that have done that. Firms with billion dollar valuations (Unicorns), that aren't profitable are examples. I think most would agree that if you grow early with profits, tends to suggest that you have customer validation and product/market fit. That's a good thing.
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