Growth Vs Profitability? How do investors decide?

Growth Vs Profitability? How do investors decide?

Rule of 40 says that a tech company can make losses, and burn cash in order to drive growth — as long as the company is scaling the business and growth is more than 40%.

Also, this rule is mostly applied to software-based startups (SaaS), and gives us an idea on how investors think before funding a loss-making startup.

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[yosup]

can you guys post more content like this? it would be very popular

[bobbyisac]

I think it should be profit/loss instead of burn rate

[Cage]

Are indian startups like byjus growing this much?

[kiranvootori]

How about having a target topline and monetization plan? If you are allowed to make 60% losses, easiest thing to do is multilevel marketing.
Let's say I have 10 customers this year. I can ask each of them to bring one customer and make a purchase of 100 Rs, I will give them 60 Rs for that.

[balaprasad]

How this growth calculated for b2b software company.

[Snigdhaknows]

Well what if the growth rate is inflated ? How do you check that?

[unicornminds]

It is only at -40 where °C is equals to °F .
I don't know why I am sharing this. ❤😅

[russellfernandez]

Isn't R40 supposed to be revenue growth and EBITDA margin?

[Talha-wlvx]

This is a vague number, I bet the multi-millinaires don't think this way

[atorbfire]

Tell me one famous startup that obeys this rule. None.

[TimothyJ]

Even apple, google make ~20% profit😂😂
You want startups to make 40% profit😂😂
Good job discouraging startups