7 Reasons Scale-Ups Earn Investments, According to HubSpot's Founder

September 20, 2021

By [email protected] (Dharmesh Shah)

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Every successful company starts with a single idea.

It’s how those ideas are approached, molded, and questioned that dictate whether or not they go on to evolve into a startup.

However, reaching startup-dom doesn’t complete the lifecycle of these ideas. Instead, becoming a startup is the moment when ideas begin to grow into something actionable, driven by a collection of intentional goals.

And as all of us who have lived the startup life know — when you’re a startup, more often than not your goal is simple: to survive.

I like to think of being a startup as treading water. Succeeding as a startup requires constant motion to ensure you can find product-market-fit, drive early customer growth, and build a baseline product all at the same time. The moment you stop moving is the moment you lose traction.

And this is all before you’ve even begun to scale.

Fortunately, there comes a point where you’ve treaded water long enough to reach your first lifeboat: Investments.

That’s where it gets exciting.

As startups move from idea mode to scaleup mode, there are a number of signs I look for in order to determine if I’m going to invest. Of course, not every scaleup has to get every one of these signs right to be worthy of investment, but the more positive signals a scaleup has to offer, the higher the odds of long-term success for that organization.

So, what is the secret sauce that these special startups have?

7 Signs that a Scaling Company is Worth the Investment

While scaling is a universal concept, the act of scaling efficiently rarely looks exactly the same for all companies.

Instead, each scale-up encounters their own unique trials, speed bumps, and roadblocks on the path to sustainable growth. When I am looking for scaling companies to invest in, I always take into account the individual circumstances of each company in the context of their growth to see whether or not they have set themselves up for long-term success.

As an investor, these are the core values I’ve seen that have proven to be present at companies with growth potential.

1. There’s evidence of customer happiness.

The customer experience doesn’t lie. In fact, it’s become a key part of GTM strategies at companies like HubSpot, which are investing in Chief Customer Officers and finding more ways to serve the customer across the organization. That’s all to say — the customer should be at the center of every decision.

For evidence of customer happiness, take a look at the NPS (Net Promoter Score) and other customer satisfaction scores of the company in question. If the results are in the green, you’re looking at a scale-up that is already making a positive impact on their customers. If instead the results are in the red, investors take warning.

Another way to determine customer happiness is to look for low or decreasing churn. A company’s retention rates are the first sign that they are …read more

Source:: HubSpot Blog

      

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