Welcome to Growthink’s Q3 2024 update. Below we will share:
- Announcing the Growthink Podcast Series – our ongoing look at trends, insights, and stories behind the most successful, fastest-growing companies and organizations
- Chief Client Officer Anna Vitale on how uncovering a Business’ “Unknown Unknowns” can drive profitability and growth
- Growthink Head of London Office Antonio Barzagli on 2024 Venture Capital trends
- Entrepreneurial Advisory Lead Bert Carder on key issues affecting small and medium sized businesses (and what to do about them!)
Announcing the Growthink Podcast Series
I am very excited to announce the launch of the Growthink Podcast Series!
Moderated and led by my Growthink colleague the estimable Mr. Tim Martinez – the series is Growthink’s ongoing look at the trends, insights, and stories behind the most successful, fastest-growing companies and organizations.
Topics we delve into via video podcast include:
- How the Upcoming Election Could Transform Lower-Middle Market M&A
- Maximizing the Sale Value of Your Business
- How to Find Your Perfect Advisor
- How Business Owners can Overcome Business Risk and Uncertainty
- How to Build Financial Projections Improve Business Profitability and Growth
- And Very Much More!
To not miss an episode, subscribe today!
Chief Client Officer Anna Vitale on uncovering a Business’ “Unknown Unknowns” to drive profitability and growth
Growth isn’t about just keeping up with the numbers; it’s about understanding the story behind them and how that story affects day-to-day operations and long-term strategy.
It’s surprisingly common for even the most reputable companies to have controllers, CPAs, and financial professionals who excel in their roles but may lack expertise in strategic financial planning. Last quarter, we closely collaborated with our clients’ accounting and FP&A teams on several key projects:
- Multi-Entity Financial Proformas: For established businesses operating across multiple entities, getting a clear and consolidated view of overall performance is a critical – yet heavy! – lift. This work often involves integrating inter-divisional cash flows, shared overhead expenses, and balance sheet considerations.For a recent healthcare client, we conducted just this sort of analysis, leading to the tough but right call to sunset a division that was driving expense bloat across the organization.
- Working Capital During Hypergrowth: For profitable (but cash-flow negative) firms in hypergrowth mode, managing working capital is often the thin line between survival or bankruptcy. For a recent last-mile logistics client, we conducted a monthly cash flow analysis based on realistic AR and AP timing assumptions. The result was a multi-faceted capital strategy designed to scale with the company while minimizing shareholder dilution.
- Startup Expense Prioritization: Where and when to spend limited dollars is top of mind for our clients at the beginning of their journeys. For a nascent spirits brand client, we provided a clear, concise financial roadmap, guiding the founders in prioritizing expenditures and developing pricing strategies aligned with market share objectives.
Learn more about Growthink’s FP&A services here.
Growthink Head of London Office Antonio Barzagli on 2024 Venture Capital trends
In 2024, venture capital investment is marked by several notable trends, shaping the landscape for emerging companies seeking funding. As we navigate this evolving market, here are key insights from leading venture capitalists we work with:
Higher Minimum Traction for Series A Rounds: Startups are now typically required to have at least $3 million in annual recurring revenue (ARR) or $4-5 million in overall annual revenue to secure Series A funding. This sets a higher threshold for the so-called “proof of concept” than in previous investment cycles.
Demand for Robust Growth Rates Continues: VCs expect high growth rates, particularly at the Series A and B stages, looking for startups with 100%+ growth, despite market challenges.
Path to Profitability: Profitability, or a clear path to it within 12 months, is crucial. Investors prioritize startups that demonstrate financial prudence and sustainability.
Responsible Capital Use: Efficient capital allocation and prudent financial planning are more critical than ever in this market environment.
Valuations are not solely based on revenue multiples: The days of relying solely on ARR with double-digit multiples to value startups are waning. Investors are incorporating Gross Profit, EBITDA, and other financial or operational metrics in their analysis.
Smaller rounds become more frequent: While many institutional investors continue to deploy large checks for Series A rounds, there is a growing trend towards smaller, more responsible rounds, ranging from $3 million to $7 million. This can be a cause or a consequence of the compressed valuations we’re observing.
Cross-Border Mandates and Global Mindset: Many venture funds now have cross-border mandates and regional offices, expanding the pool of potential partners for startups and opening up new opportunities for funding and strategic needs.
These trends highlight a shift towards more disciplined and diversified investment strategies in 2024, fostering a resilient and sustainable startup ecosystem.
To explore capital raising or M&A opportunities for your business please get in touch by completing this form or calling us at (213) 927-3968.
Securities transactions are conducted through GT Securities, Inc. Member FINRA/SIPC. Nothing in this email should be regarded as an offer to sell or a solicitation of an offer to buy any Investment.
Entrepreneurial Advisory Practice Lead Bert Carder looks at key issues affecting small and medium size businesses, and what to do about them.
As a Business Owner or C-Suite Executive, you are keenly aware that inflation is eating into your margins, that hiring and retaining talent has become even more difficult and that the need to continually upgrade your technology is requiring a huge effort and budget each year.
Here are a few ideas to “business pivot” to drive growth and competitive advantage:
- Leverage Technology: Invest in digital tools and software to increase efficiency, reach new customers, and streamline operations.
- Focus on Marketing and Branding: Develop a strong marketing strategy and brand to attract and retain customers in a competitive landscape.
- Optimize Cash Flow: Implement budgeting and forecasting practices to better manage cash flow and navigate economic uncertainties.
- Upskill and Retain Talent: Identify your business’s strengths, such as culture, and use them to attract and retain skilled employees
If you have questions or need support, Growthink has a team of business experts who can work alongside you to develop strategies and solutions to address these types of challenges and help you put together a strategy and execution plan. Learn more here.
Contact us to schedule a complimentary discovery call.
