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Founders tips - Issue #37

Hi, Startup’s profitability is a growing discussion these days. It's a recurring topic that gets more
Founders tips - Issue #37
By Id4 ventures • Issue #37 • View online
Startup’s profitability is a growing discussion these days. It’s a recurring topic that gets more discussed when financial people feel we are at the end of a bullish cycle, and that feeling is here.
Profitable startups have inevitably a higher survival rate during downturns, check 2000-1 or 2008-9.
Now, should your startup aim for profitability? which often means growing slower.
I think there are 2 key criterias to take into account
1) Am I on a “winner takes all” market? or can 2-3-4 competitors coexist in this market. If you are a “winner takes all” market, land grab strategy is key so you have to go fast.
To go fast you need to raise money and focus on market adoption rather than bottom line.
If you are on a market that can sustain several competitors, it’s really worth looking at a slower growth strategy, where you have to raise little money or no money at all (see examples below).
2) Do you need a lot of tech to be developed before being able to get your product live.
If yes then you need VC money.
Profitability discussion is well alive today because a lot of new startups today are more, what we like to call, digital SMBs. They take advantage of the market depth which was not the case 10 years ago. Today, there is 3.5b+ internet users worldwide, e-commerce is $2.5tn+, so finding a $1bn niche with little competition becomes easier.
Keep also Bezos quote in mind “Constraints breed resourcefulness”.
We like to finance digital SMBs aiming to take their market with a very efficient cash burn rate and reaching profitability soon. This is becoming an interesting field for family offices and Angel investors. Even some new VCs are looking at this new type of startups. Check below
Happy to continue that profitability discussion live on twitter….
As usual, others curated articles really worth the read, check how Dropbox saved tons of money with their own tech.
Enjoy your week.

Be profitable or not ?
How we Bootstrapped our SaaS Startup to Ramen Profitability – Canny Blog
How One SaaS Startup Achieved Profitability in 2 Years | Databox Blog
Bryce Roberts and Tim O’Reilly: VCs that help startups raise revenues, not rounds
A better you
3 Lessons to Learn From the Epic Flops of Jawbone, Yik Yak and Beepi |
A better company
Consumer vs Enterprise Product Management- Mind the difference?
Improve your tech
Dropbox saved almost $75 million over two years by building its own tech infrastructure – GeekWire
Undestand better VCs
5 Things On Every VC’s Checklist – Campus Founders Fund Blog – Medium
Tweet of the week
David Cummings
Most entrepreneurs raising money shouldn’t. Instead, spend that time finding new customers. Fundraising makes sense when you can spend $1 to make the company $5 more valuable. Resist the fundraising temptation. Delight the customer and refine the business model first.
3:21 PM - 1 Mar 2018
The big read of the week end
What impact will automation have on our future society? Here are four possible scenarios | World Economic Forum
Bryce Roberts and Tim O’Reilly: VCs that help startups raise revenues, not roun
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