Published: 24 July 2024
Emerging tech companies often experience stalled growth, focusing too intently on earnings, cash flow, talent and revenue. Tech operating partners should encourage portfolio companies to spend less on these and more on sales and marketing to ensure steady growth.
Portfolio companies (PortCos) that are at a risk of slow growth for elongated periods of 18 to 36 months seldom recover, losing value, customers, employees and market momentum.
Traditional innovation approaches limit innovation effectiveness due to inconsistent execution and stagnant methods of harvesting ideas.
Strengthen the operating expense (opex) profile to overcome “stalled” periods and reduce earnings before interest, taxes, depreciation and amortization (EBITDA) in the shortterm to increase spend.
Spur innovation effectiveness by not overdeveloping product features and functionality once product-market fit (PMF) is achieved, and ensuringthat any increase in sales and marketing budget achieves greater economies of scale.
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