Balancing growth and profitability in tech startups
By Ståle Løvbukten
Why balance growth and cash flow?
- Slightly lower growth (could still be significant) could be more healthy and better for the long-term viability.
- Conserving cash reduces the risk of needing to raise capital at unfavourable terms.
- Getting used to running a business with net cash burn over many years could make it more difficult to switch to significant profitability later.
- Positive cash flow allow for owners to get “a small exit every day” rather than gearing up for a big exit.
- This imply that the owners do not need an exit within a certain timeframe (like VCs would require), and the company with its investors can choose a longer journey if they want.