The Spotlight is on Leaders Who Drive Capital-Efficient Growth

The “Grow at All Costs” strategy has lost its luster.

Economic headwinds, curtailed access to capital and the sharp drop in exit opportunities have put the spotlight on capital-efficient growth, or what some call “smart growth.”

The aim is to grow profitably, with sustainable progress, and use margin to fuel further growth. After a decade of placing leaders who drive capital-efficient growth, we can help companies make this business model pivot with our unmatched network of proven “smart growth” leaders.

The ‘Land Grab’ Strategy

In many start-up stage and early growth stage ventures, the strategy could be compared to a “land grab.” A firm that is introducing an innovation to market wants to capture market share as quickly possible, making the most of a first-mover advantage.

This implies a willingness to expend more on customer acquisition costs than the new customer will generate in revenue in the near term. The strategy is based on the idea that later revenue generated by these customers will be profitable once the new market is captured.

It’s especially suited to SaaS companies that have an annual recurring revenue model and can count on a steady stream of subscription revenue from these customers into the future.

This strategy is best when market conditions in which access to capital is unfettered and in which customer spending is on the rise and is sustainable.

If you grow to a certain point, your product-market fit is on target, and customers are indeed maintaining their subscriptions, then you most likely can find investors willing to fund that continued growth to position the company for eventual exit.

But today’s economic climate increases the risks associated with this model, as customer churn spikes, access to capital dries up, and the potential for exit is diminished.

What may have worked for a venture-backed startup or early growth equity stage company to this point may not work going forward.

The Shift to Capital-Efficiency

Capital efficient growth, on the other hand, implies a more sustainable business model for turbulent times. The model allows the company to grow while fueling further growth with profit.

Bespoke Partners has placed more than 900 leaders in private equity backed software and SaaS companies who are experts in driving capital-efficient growth.

Private equity has long focused on value creation using sustainable growth models and capital-efficient growth has always been in vogue for the sector. So over 12 years we have built out an unrivaled network of C-suite leaders who understand how to grow profitably.

As we noted in our recently published Private Equity Talent Benchmark Report, capital-efficient growth expertise is a desirable skill across the C-suite.

Consider these examples from our executive placements:

• We placed a Chief Revenue Officer who accelerated profitable growth past $100 million for an enterprise software company, paving the path to a very successful exit.
• A Bespoke-placed CFO helped drive customer base expansion for a cybersecurity software company by 30% while increasing EBITDA. This compressed the hold period to less than two years.
• A CEO we placed led an HR software solution firm into new markets through acquisition and expansion. This set up capital-efficient growth and paved the way for a successful exit.

These cases illustrate some of the capital-efficient value-creation methods that our leaders are adept at deploying.

If you are involved in a company that needs to move to a profitable growth strategy, such as venture-backed or early-stage growth equity, we can help you make the pivot.

Just drop us a line at info@bespokepartners.com 
or click here: https://www.bespokepartners.com/leaders-for-capital-efficient-growth/