8 Tips From Capital-Efficient Founders

The best founders we have worked with were very scrappy from the start. Founders who’ve built thriving businesses without massive outside funding have a different playbook. Here’s what those scrappy founders say that is contrarian to the mainstream advice you hear out there:

1. "Focus on Profits Early"
   Scrappy founders prioritize profitability from day one. It’s not about burning cash for hypergrowth—it’s about building a company with a real business model. If you don’t see a clear path to make the numbers work, then your company should not exist. Cash Flow will allow you to own your destiny. Outside funding is not under your control.
2. "Make Every Dollar Work"
   Instead of raising big money, scrappy founders stretch every dollar. Whether it’s through lean operations, smart partnerships, or creative marketing, they make small budgets work harder.
3. "Grow Organically"
   While the venture-backed route pushes for aggressive scaling, capital-efficient founders grow through steady, organic means. They prioritize customer retention and word of mouth over flashy growth hacks.
4. "Build a Core, Loyal Team"
   Rather than hiring fast, successful scrappy founders are deliberate with each hire. They build small, tight-knit teams where everyone wears multiple hats and contributes meaningfully to the business.
5. "Customer Feedback Over Investor Input"
   Scrappy founders are laser-focused on what their customers want, not what investors think. Direct customer feedback shapes product decisions more than the advice of a VC board.
6. "Take Control of Your Timeline"
   Later stage VC incentives are often misaligned, pushing for fast mark-ups or deals that don’t always favor founders. Scrappy founders, on the other hand, control their own timeline, choosing when to grow, expand, or exit on their terms.
7. "Be Resourceful, Not Flashy"
   Instead of spending big on office spaces, marketing, or unnecessary perks, capital-efficient founders find resourceful ways to get things done. It’s not about looking successful, it’s about being successful.
8. "Leverage Relationships, Not Titles"
   Scrappy founders build their networks with genuine relationships rather than relying on big-name advisors. They know that the people who truly help them grow are those willing to roll up their sleeves and get involved.

We’ve witnessed first-hand that a lean, capital-efficient way of doing business is more than just an alternative—it's a proven path to success. The founders we know who embrace these values stay nimble, in control, and aligned with what matters most: their customers and their vision.

You Made a Ton of Money… Now What?

For many, the dream of achieving financial success drives decades of hard work, sacrifice, and ambition. But what happens when you finally “make it”?

The answer may surprise you: the satisfaction of financial success is often fleeting.

After so many years observing entrepreneurs “making it,” the conclusion is almost universal: while the money itself brings security, it doesn’t deliver the lasting happiness or fulfillment many expect. The initial rush fades quickly, leaving many asking a deeper question:

What’s the Purpose of Life?

This realization often prompts a profound shift in perspective. Once the financial pressure is lifted, many come to see that life’s greatest purpose isn’t accumulating wealth but loving and helping others.

It’s a question of legacy. What impact will you leave behind? How will you use your unique position of security to make a meaningful difference?

A Unique Opportunity to Give Back

If you’ve reached a point of financial stability, you’re in a privileged position to help others—to mentor, to give, to support, and to invest in other people. It’s not about abandoning ambition or growth; it’s about channeling your energy into areas that resonate with your values and make the world a better place.

The Inner-Circle: A New Definition of Success

We’re seeing a powerful movement among a group we call the “Crescent Ridge Inner-Circle”—a collective of successful entrepreneurs, executives and operators who have excelled in traditional metrics of success and arrived at the same realization: money is no longer their focus. Instead, they’re driven by a strong desire to help others, learn new things, empower early stage founders and solve meaningful problems.

The shift isn’t just altruistic; it’s deeply rewarding. These individuals report feeling more fulfilled and energized than ever before. By turning their attention outward, they’ve found a deeper sense of purpose—one rooted in connection, contribution, and impact.

Do You Need to “Make It”?

A lot of the entrepreneurs we work with are not even driven by money. Their lives led them through a journey to solve a deep problem they understand very well and want to help others. That’s why we love working with these entrepreneurs!

It would be wonderful if most people didn’t have to achieve financial independence to come to this realization and start helping others. Only a few already get this and live their life this way. But we are humans, and we are “dumb”, and hearing things is not enough. You need to live it and go through your own journey to get to certain realizations.

If you’ve achieved financial success and find yourself wondering, “Now what?” consider this: the most meaningful journey might be just beginning. Understanding that your company or success is not a synonym for who you are as a person is a hard pill to swallow.

So, ask yourself: what is my unique gift? How can I help others with it? How can I make a difference? How can I redefine what success means to me? You might end up finding out that helping others is what will bring purpose and happiness in your life, regardless of your financial status.

Advice “Red Flags” for Scrappy Founders

As an efficient founder, you've probably heard a lot of mainstream advice that gives you pause. If something doesn’t feel right for your business, trust your gut—your intuition is your best guide. Here are five common pieces of advice that should raise red flags when given:

RED FLAG #1: "Raise as Much as You Can"
More money isn’t always the answer. Raising big funds brings big expectations—and often, strings attached. Stick to your lean approach and raise only what you need. Less capital can mean more freedom.

RED FLAG #2: "Hire Fast, Scale Fast"
Bigger teams don’t automatically equal success. Every hire should make a measurable impact. Scaling smart is far more sustainable than scaling fast. Focus on building a team that truly moves the needle for your business.

RED FLAG #3: "Spend Big on Marketing or a Sales Force"
Splashy and expensive marketing campaigns are not your game. You know how to creatively and cost-efficiently grow your brand, focusing on real customer loyalty rather than vanity metrics. Don’t get swayed into spending big on things that won’t drive meaningful results.

RED FLAG #4: "Focus on Hypergrowth Over Profitability"
Profitability is key. It’s easy to chase rapid growth, but the true measure of a successful business is its ability to sustain itself in the long run. Focus on building a strong foundation that supports both growth and profitability.

RED FLAG #5: "Big Advisors and Huge Networks are a Must"
Name-dropping won’t solve real problems. Scrappy founders know that having the right people in their corner is far more valuable than collecting well-known advisors. It’s about quality, not quantity.

RED FLAG BONUS: "You Need VC to Win"
VCs want you to believe this, but if you’re profitable and growing, you’re already winning—on your terms. Many successful businesses have thrived without venture capital, and if your business model works, you’re already ahead.

Trust your instincts and stay true to what works for you. Not all advice is created equal, and for scrappy founders, efficiency and thoughtful decision-making are often the biggest strengths.

Allison and Maria

Is Entrepreneurship Now Only for the Elite?

As a daughter of entrepreneurs who has spent the last 20 years investing in startups, I have watched with a mix of fascination and dismay as the definition of an entrepreneur has evolved. Today, it seems that being an entrepreneur is like getting a membership into an elite club, where visionary innovators are flush with venture capital dollars, trying to disrupt industries and bring their products to the masses in the shortest amount of time.

The Misfits of Yesteryear

When I think of an entrepreneur, I think of my parents. They were misfits. As immigrants, they didn't fit into the conventional corporate American world. For most of their young adult lives, they were often overlooked or looked down upon, struggling against a system that neither understood nor valued their contributions or capabilities. It was their very status as outsiders that fueled their determination and ingenuity.

Contrary to the romanticized image of the visionary dreamer, my parents were pragmatists at heart with an optimistic outlook on life because their survival depended on it. A simple, burning need to survive and thrive despite the odds drove them. They focused on solving real problems with practical solutions, always mindful of the bottom line and the harsh realities of the market. I learned what entrepreneurship was from witnessing them in action.

The Rise of the Elite Entrepreneur

Fast forward to today, where I see a different breed of entrepreneur. Many startups come out of stealth (if they’re lucky), or prestigious incubators and accelerators, armed with glossy pitch decks and well-rehearsed narratives that appeal to a select group of venture capitalists. These entrepreneurs are often well-connected, well-educated, and well-funded from the outset. While there's nothing inherently wrong with this, it has shifted the perception and accessibility of entrepreneurship.

The Consequences

Our society is increasingly divided into the haves and have-nots. Historically, entrepreneurship offered a pathway to bridge this divide, providing opportunities for those who didn't fit the traditional mold of success to create their own fortunes. However, I see too many founders today allowing their inability to raise capital to hold them back from succeeding. This is a false belief. True entrepreneurs don't let the lack of external funding define their potential or their success. They find ways to make things work with whatever resources they have, proving their mettle through resilience and ingenuity.

A Call to Return to Our Roots

It’s time to return to the roots of entrepreneurship. We need to support and celebrate the misfits and pragmatists who challenge the status quo and find creative solutions to everyday problems. This means:

• Lowering Barriers: Creating more accessible pathways for funding and support, particularly for those outside elite circles.
• Valuing Pragmatism: Recognizing the importance of practical, incremental innovations alongside visionary ideas.
• Fostering Resilience: Encouraging a culture that values grit and determination as much as, if not more than, polish and connections.

Entrepreneurship should not be an exclusive club for the privileged few. It should remain a beacon of hope for those who don’t fit into the traditional molds, who are driven by necessity and the desire to make a difference. By embracing the pragmatists and the misfits, we can foster a more inclusive, resilient, and innovative entrepreneurial ecosystem.

At Crescent Ridge, we celebrate and want to fund the scrappy, determined individuals who, against all odds, build businesses that solve real problems and create lasting value. They are the true heart of entrepreneurship, and it's time we remember that.

What do you think?

Allison

The end of Venture Capitalists?

How AI-Driven Efficiency is Transforming the Industry As We Know It

In February, Sam Altman discussed the possibility of a $1B one-person company. My friend Elaine Pofelt has been talking about this concept for years in her books, "$1M One-Person Business" and "Tiny Business Big Money." With AI making business building cheaper and technological efficiencies making everyday items more affordable despite inflation, I'm wondering: what will happen to the venture capital industry?

This situation reminds me of 2010 when I moved to LA from NYC after spending six years working at a VC firm and for one of our portfolio companies focused on medical devices. Medical devices were incredibly capital-intensive, and I believe there's still a need for big dollars in life sciences and deep tech startups with substantial R&D components. As I was learning about technology investing, the LA startup ecosystem was beginning to take off. I was fascinated that for $50,000, you could build a prototype and test it on customers. At the same time, I was confused by startups raising millions of dollars in their early days when it didn't seem necessary, nor were they ready for it. Yet, founders were determined that raising enough money would ensure their businesses' success. However, I saw time and time again that they were building something that didn't fit a specific market problem, making it expensive because they had to add many bells and whistles to please various customers.

In technology companies, those lucky enough to get into the VC club can fund grand visions, but at a cost. For everyone else, there's a real shot at entrepreneurship. But entrepreneurship is not about raising money; it's about survival. Survival against all odds – despite not being able to raise money, despite customers not understanding your business, and having no choice but to risk it all. For these companies, power is in the hands of the founder, but will they give that power away to the VCs?

If entrepreneurs return to their roots, the VC industry will have to change. If not, the VCs hold the power.

Is Technology Costing Us Our Humanity?

At Crescent Ridge, we love being investors because we gain so much inspiration from entrepreneurs’ creativity, innovation, and passion. Our goal is for businesses to create solutions to life’s deep challenges. We share a passion for helping founders solve problems, and we want to support them with our capital, network, and expertise. Technology plays an important role in this, especially because it’s made it accessible for almost anyone to be an entrepreneur today. Over the last couple of years, we've seen technology advance faster than ever. This has sparked a lot of reflections that have impacted our thought process when making investments and I wanted to share them with you today.

Technology is a tool, and as we know, tools can be used to help humanity but also for selfish gain. Tools of the past were geared around efficiency. For instance, hammers are more efficient than a rock. Cars are more efficient than walking. These tools have also enabled us to be “superhuman.” I cannot pound a nail with my hand without damaging it, but a hammer gives me the power to do a task I could not otherwise complete. However, for tools of the past, human control and direction were the only way a tool could be used.

Today's technology has shifted, and now it mimics being human. It is designed to learn and evolve as it continues to be used. ChatGPT, DALL-E, and other forms of AI continually shift to create outputs that mimic those created by humans. As I grapple with what this means for society, I find myself torn between all the efficiency I gain from technology and the many ways it distances me from my own humanity.

Being human is often uncomfortable and challenging. But this also teaches us about joy and purpose. It is in the midst of hardships that we are inspired to be even more human—passion, creativity, and innovation are often born out of deep hurt and heartache. I worry that the temptation to avoid pain, hurt, and sadness hurls us into a world where we fear those things, and so we fill our time with quick fixes that we think will temporarily distract us from the inevitable.

In the last week, I have received news that two people I deeply respect have been diagnosed with ALS. One of them was a pastor at my church. Despite an aggressive form of ALS that has robbed him of his ability to speak, he bravely decided to preach today. At the end of the service, our church prayed for his wife and children as they stood in front of the congregation. His family held hands and wept together. Our whole church cried as we witnessed his incredible courage amidst deep sadness and grief.

Being human is about suffering. We can’t AI away pain. And when we look for the things of the world to mask the deeper hurts in our lives, things only build up and create even more and longer-lasting sadness.

We are at a point in our society where we talk openly about mental health, addiction, identity, and purpose. But I believe productivity, power, money, and fame are versions of addictions that are deemed “healthy.” Like any addiction, it can start out innocent but then control you. I worry that people in charge of funding, creating, and developing technology are addicted to the things that keep them in power, and we are enabling them by allowing them to stay in power.

I am concerned about the future of technology, so at Crescent Ridge, we choose to invest in companies that bring us closer to being human. As we use technologies in our personal and professional lives, our aim is always to apply them in a way that amplifies who we are. We are here to embrace our “human-ness,” our connection, and the wealth of experiences this brings to our lives. Reach out to us and share the ways you are managing the balance between modern efficiencies and human connection. We look forward to connecting with you!

Allison

Small is the New Big: Start-Ups, Micro-Funds, and Beyond

Three weeks ago, we caught up with a good friend who is a former successful entrepreneur. He sold his company a couple of years ago and is now advising several startups. He was amazed by one particular company he’s coaching: a consumer business with $25M in revenue, 70% gross margins, and $6M EBITDA. They have a tiny team—just three full-time employees and a couple of part-timers. They raised a small amount from friends and family and are very content with their business. Our friend reflected on his own experience with the larger company he built and sold, where he had raised significant capital. What really struck us were his words: "If I were to do it all over again, I wouldn't want to raise big VC. I would keep the team very small and do things differently."

We hear stories like this more often lately and are seeing a trend: More people are deliberately choosing to stay small and build companies differently. We have noticed that the happiest businesspeople we meet these days are entrepreneurs running smaller, profitable businesses deeply involved in their communities. Many have experienced success in bigger corporations and understand that the bigger you get, the harder it is to maintain your culture and keep a growing team happy. While there are certainly advantages to being big, and amazing companies like Patagonia that manage to keep their soul after they grow, we're noticing a trend of successful people who could go big choosing instead to stay small.

We see similar advantages in running a small fund. Despite opportunities to grow our AUM and raise more money, we have deliberately chosen to stay small. The reasons? We can truly stay true to our core values, we like the discipline of capital constraints, we don’t want to have a big team, we can find good deals that most VCs don’t find interesting because they are too "niche", and ultimately, we can make decisions that are not just purely financial, which is what sometimes happens when you have too much capital and too many LPs.

It also took us a few mistakes to understand that as a smaller fund, we need to invest with a different approach than traditional VCs to make our numbers work. This approach is more focused on hyper capital efficiency and survival skills in the early stages. We still benefit tremendously from venture “home runs” in our portfolio, but our portfolio composition and risk profile need to be a bit closer to private equity than most VCs. We believe that this approach not only benefits small businesses but also provides a stronger foundation for companies going the traditional venture route. It’s all about minimizing waste in the early stages when most companies pivot anyways and take a lot of time to nail their product-market fit and business model. We believe that capital constraints at that stage will only make your company stronger once you get to the growth stage.

We have many examples of this in our portfolio. For instance, Uqora, one of our early investments focused on women’s health, raised less than $2M, had a team of 2.5, and went from launch to exit to strategic in four years. In retrospect, they benefited a lot from staying very lean and not having the opportunity to raise as much as they initially intended because that increased their optionality. Had they raised more capital, they would have to grow a lot more to get a good outcome. This capital constraint kept them very focused; they nailed PMF and their business model quickly. They had a lot of options by the time they reached 8-digits in revenue. They ultimately decided to sell their company to a strategic buyer, and it was a very successful exit for founders and investors alike. But they could have kept growing the company and raised growth capital with great terms and a very good business foundation.

Whether in the realm of micro-funds or startups, the trend toward smaller scales is driving significant innovation and success. We believe that small is the new big. There is a lot of energy in a generation of entrepreneurs who are pragmatic, innovative, and want to use their business as a way to serve others and make the world a better place. These entrepreneurs are not so interested in getting in the next YC batch or getting Sequoia’s funding. They understand that “small is the new big” and are ready to do it differently this time.

Do you know any entrepreneurs ready to do things differently? Do you know other fund managers who see their small fund size as their greatest strength? Send them our way! We need to grow this new entrepreneurial ecosystem where we, small funds and non-traditional entrepreneurs, can thrive.

Maria and Allison

3x The Impact of Your Sustainability Budget

Achieve Carbon Neutrality, 1% for the Planet, and Improve Ocean Biodiversity with SeaTrees

Are you a founder interested in 1% for the Planet and Climate Neutral certification? We have a great tip for you that a lot of entrepreneurs love. You can achieve both your 1% for the Planet commitment and carbon neutrality by partnering with SeaTrees. This approach not only maximizes your sustainability efforts but also supports an incredible mission that makes a real difference. As someone who volunteers with SeaTrees, I've witnessed their incredible team, at the forefront of climate change innovation, in action, and can attest to their impactful projects (they currently have 23 projects around the world).

Why SeaTrees?

SeaTrees offers a unique opportunity to achieve carbon neutrality while fulfilling your 1% for the Planet commitment. Their mission is to restore coastal ecosystems and combat climate change by planting mangroves, kelp, and other critical habitats. These projects not only sequester carbon very effectively but also support marine biodiversity and local communities.

The SeaTrees Mission

SeaTrees focuses on restoring blue carbon ecosystems, which are some of the most efficient natural carbon sinks on the planet. Their projects include:

• Mangrove Planting: Mangroves sequester up to 10 times more carbon per hectare than terrestrial forests. They also protect coastlines from erosion and support diverse marine life.
• Kelp Reforestation: Kelp forests absorb CO2 and provide habitats for marine species, improving ocean health and biodiversity.
• Community Support: By working with local communities, SeaTrees ensures sustainable project development and long-term environmental stewardship.
  

How to Leverage SeaTrees for Maximum Impact

1. Understand Your Emissions: Conduct a comprehensive greenhouse gas (GHG) inventory of your operations. This includes emissions from direct activities (Scope 1), indirect emissions from purchased energy (Scope 2), and other indirect emissions such as supply chain activities (Scope 3).
2. Strategic Allocation: Allocate your 1% for the Planet funds through SeaTrees to directly offset your carbon emissions. Their verified carbon credits ensure that your contribution is making a measurable impact.
3. Achieve Carbon Neutral Certification: By partnering with SeaTrees, you can work towards earning a carbon neutral certification. This certification demonstrates that your company has measured and offset its carbon emissions to net zero, enhancing your credibility, impact and marketability.
4. Engage Your Stakeholders: SeaTrees provides incredible storytelling and marketing collateral to engage your customers and stakeholders. This not only strengthens your brand but also amplifies your impact by showcasing your commitment to sustainability. Unlike other organizations, SeaTrees offers extensive branding assets for your marketing efforts.
5. Involve Your Team and Customers: Make sustainability a core part of your company culture. Engage your team in your environmental initiatives and encourage them to contribute ideas. Communicate your efforts to your customers, enhancing customer loyalty and attracting environmentally conscious consumers.

Partnering with SeaTrees offers a strategic and impactful way to leverage your 1% for the Planet commitment to achieve carbon neutrality. By supporting their mission to restore coastal ecosystems and combat climate change, you can significantly reduce your environmental impact and enhance your brand's reputation. This means you get three times the impact for your sustainability budget: supporting the 1% for the Planet program, achieving carbon neutrality, and supporting biodiversity. All this, while also getting the benefits of partnering with Seatrees: marketing collateral, opportunities to visit the sites, content, and working with their incredible team.

If you wan to learn more information on how SeaTrees can help your business achieve its sustainability goals, check out their website here and their partnership with Climate Action here.

Informed Audiences, Elevated Expectations

How Information Availability Pushes Companies to Step Up

Modern digital technologies have fundamentally transformed the way consumers interact with businesses. At Crescent Ridge, we have seen firsthand how the abundance and accessibility of information raises the bar for companies aiming to build a loyal and reliable customer base. It is no longer enough to have a compelling marketing message; companies must build credibility and cultivate brand values that resonate deeply with their audience. We're excited to share our perspective and a few examples we see in our portfolio. 

Transparency Is Non-Negotiable

Everyone can become educated on a given topic due to the abundance of information available on the internet. When we combine the accessibility of research from verified experts with the power of social media and AI, it is clear that we live in an era of an abundance of information. As a result, transparency is proving to be a pillar of business success. Those who are interested can quickly verify for any business the internal treatment of employees, ethics of business practices, and environmental impacts of operations. 

One of our portfolio companies, Esas Beauty, is a prime example of embracing transparency. They manufacture fragrances and focus on sourcing the cleanest, synthetic-free ingredients; thus ensuring their products are safe and environmentally friendly. Their commitment to transparency has garnered a loyal customer base who prioritizes their health, and we’re proud to support their journey.

Esas Co-Founders, Amanda and Seda, use their extensive experience in fragrances and chemistry to develop synthetic-free products.

Quality and Value Take Center Stage

With easy access to detailed product reviews, consumers are equipped to make informed choices. This shift forces companies to deliver high-quality products and services that offer real value. Brand recognition and marketing strategies alone are no longer sufficient; businesses must prove their worth through tangible offerings.

We’ve witnessed our portfolio company, Needed, exemplify this commitment to quality. Their rigorous supply chain standards, coupled with plastic-neutral, carbon-neutral practices, B-Corp certification, and their participation in 1% for the Planet, demonstrate a dedication to excellence and commitment to their customers and the planet. Last year, they also launched Needed Labs, a major effort and investment to ensure they are at the forefront of women’s health research and innovation so they can offer the highest quality in their products. This launch has also reinforced the brand’s value proposition. It's inspiring to see how they set the bar high for quality, innovation, sustainability, and thought leadership in their industry.

Julie Sawaya & Ryan Woodbury, co-founders of Needed, created a complete Nutritional System™ for fertility, pregnancy, postpartum, and women's health.

Ethical Practices and Authentic Engagement

Modern consumers are quick to detect a lack of authenticity and expect genuine engagement from the brands they support. Customer experiences are frequently shared online, emphasizing the importance of exceptional service and engagement as key differentiators. Companies must look beyond the bottom line to build meaningful relationships with their audience.

To the Market provides software that helps companies maintain good manufacturing practices, further showcasing the importance of ethical business operations. By leveraging technology to ensure compliance and quality, they help businesses align with consumer expectations. Their platform is a testament to how technology can drive ethical business practices.

To sum it up, we believe that as hard and competitive as things are getting, this era of hyper-educated consumers can present a huge opportunity for brands that truly care and want to wholeheartedly do things right. When businesses embrace educated audiences as a source of strength, they set themselves up to corner their markets as their consumers become their advocates.

We want to hear from you! What are ways companies have stepped up to earn your loyalty? Share some brands you love with us!

To the Market's vision is to democratize access to the global supply chain and provide makers worldwide with economic empowerment.

Profitability vs. Growth. The VC Conundrum

One of the most challenging decisions this year for startups and investors alike is choosing between profitability and growth. Cash flows are tight, interest rates are high, funding is at an all-time low, and on top of that, you have a crazy geopolitical environment with a lot of uncertainty, making it harder than ever for entrepreneurs to grow their businesses. Founders are hearing conflicting advice from their investors: "Watch for profitability, but... also keep growing at a venture pace!" This type of advice seems schizophrenic.

The stakes are high. If you are very responsible with your cash and very conservative, the impact on multiples will be very apparent when you try to sell your company or raise the next round. You also risk falling into the dreaded Zombie Zone, where you are no longer considered a high-potential opportunity and end up with limited options either to restart, pivot, hibernate, or become a "lifestyle business."

Our approach: Slow-down before running fast

At Crescent Ridge, we have a contrarian approach to most VCs and are strong believers in slowing down in the very early stage to avoid this conundrum. Instead of the classic advice: "Raise a lot more in your pre-seed/seed because you'll make mistakes and will need more money than you think," we encourage startups to slowdown in the early stages, and raise less to minimize waste. The early stage is the best time to slowdown to test your product, validate your market fit, and refine your business model. You really need far less than you think, and you can even do most of the customer validation work while having another job or by raising a minimal amount. The constraints of capital in this early stage will only make your product stronger.

Once you have solid proof of concept and significant market traction, proceed with fundraising. At this stage, you can confidently scale, knowing your product and market fit are secure. And you won't be wasting money on the wrong product, customer, or approach.

But... what if my company is already in growth mode?

For startups already in the midst of rapid growth, balancing burn rate with sustainable development is crucial. Here are some strategies:

• Prioritize and focus on core activities: Identify the initiatives that drive the most value and cut back on the "shiny objects". This helps manage resources more effectively and avoid burnout.
• Streamline operations: Streamline operations to reduce costs without compromising quality or customer experience. Use agencies or contractors when possible to keep overhead low. We see more and more seven-digit revenue businesses with very lean 2-5 people teams. Small is the new big.
• Strategic partnerships: Form partnerships that can provide additional resources or capabilities at a lower cost. We have many such partnerships in our portfolio, and cross-selling can significantly impact organic growth and lower CAC.
• Maximize existing relationships: Focus on upselling and cross-selling to your current customer base. Expanding within an existing customer segment is often more cost-effective than acquiring new customers.
• Drive your decisions with data: Use customer data to drive decisions on where to allocate resources for maximum impact. It's always good to have a methodical team member aka "the dream killer" who can keep everyone focused and who helps prioritize the best initiatives for the company.

The profitability versus growth conundrum remains one of the toughest challenges for our portfolio companies, especially in 2024's tight financial landscape. By taking a measured and strategic approach, startups can navigate this complex terrain. Patience in the early stages, combined with strategic scaling and resource management, can help companies achieve both profitability and sustainable growth. Balancing these priorities is not easy, but with careful planning and execution, startups can thrive even in this challenging environment.