Recap of Repeatability 2023

In its most recent edition, Repeatability 2023, co-hosted by DTCP and Stereo Capital, witnessed an overwhelming response of investors and company operators in attendance. The event featured two engaging and insightful panels, focusing on shifting towards sustainable and fundamental-driven growth while achieving operational excellence through efficient resource allocation. Esteemed panelists, including experts from top tier venture capital firms like Sapphire Ventures, Lux, Capital, alongside C-level operators from leading innovative companies such as Cohere, Zuora, Cargomatic and HighRadius. 

Below we highlighted some interesting data points, perspectives and anecdotes that were discussed. If you’d like to chat about these or related topics, feel free to reach out to Lance Matthews or Dmitry Dakhnovsky 

Repeatability is a resource for growth stage software and technology founders, operators, investors and advisors. It provides the best thinking on scaling recurring revenue technology businesses. 

 

Fundamentals and Efficient Growth

  • The "growth at all costs" mentality of 2020/2021 has given way to a return to fundamentals and focus on efficient, sustainable growth in 2022/2023. Investors want to see realistic milestones and ROI.
  • Key metrics investors look at: burn multiple, CAC, LTV, net revenue retention. Goal is measured, thoughtful growth balanced with profitability.
  • Exit expectations have rationalized - billion dollar "unicorn" exits are rare, and most exits are via M&A. Critical to consider likely acquirers and exit strategy.

Disruptive Business Models

  • Disruptive technologies alone don't make a business. Need a disruptive business model too for real market opportunity.
  • With unproven technologies, business model isn't fleshed out early on. Team needs vision to build model fundable later. AI has potential but unclear stand-alone models yet.
  • Examples like cloud show business model disruption - new delivery model upended incumbents. AI may be more of an enabling technology, remains to be seen.

Ideal Investor Profiles

  • Investor criteria vary, so startups should understand their ideal profile and shape milestones and messaging accordingly.
  • Work backwards from your goals and opportunities to find the right partner investor. Don't assume you require or want VC money.
  • Be deliberate if fundraising - don't stumble into it. Prepare diligently and know what you want to achieve. Fundraises still happening for strong teams/models.

Valuations and Multiples

  • Valuations and multiples have normalized from pandemic highs based on market realities. Future potential still factors in but fundamentals matter.
  • Steady valuation step ups each round are better than shooting for the moon and missing - avoid flat or down rounds.
  • Less concern with ego-driven valuations. Focus on sustainable capital strategy and partners over the long-term.

AI in Venture Capital

  • AI won't replace human VC jobs anytime soon, but it is an efficient diligence tool (e.g. quickly researching new concepts).
  • A bigger opportunity is using AI internally on proprietary company data, not just public information. This can create a real competitive advantage if deployed strategically.
  • Overall, AI will transform workflows over time but value is in augmentation, not wholesale replacement of jobs.

Sales Efficiency & Revenue Optimization

  • Companies have focused heavily on optimizing sales efficiency and directing spending towards proven strategies of the past. There is less experimentation happening overall.
  • Strategies like deeply analyzing customer data to identify ideal customer profiles, doubling down on the most profitable segments, and focusing sales and marketing dollars on those sweet spots have proven effective.
  • Companies are moving away from "growth at all costs" and toward more thoughtful, metrics-driven allocation of resources.

Getting Back to Basics

  • The markets have forced companies to get back to basics - taking a deep look internally at what's working and ensuring they have the right organizational processes and metrics dialled in.
  • There's been a focus on truly understanding sales productivity at a granular level, looking at customer behavior, churn, lifetime value to optimize spend.
  • It's about optimizing the internal mechanics of how a company sells, not just blaming external factors like the economy.

Balancing Growth & Efficiency

  • Balancing growth and financial efficiency has been tricky during this period. Companies don't want to cut budgets so much that they limit future potential, but burning too fast is also risky.
  • It requires smart, strategic thinking on how budgets are allocated and for what duration. Making smaller, targeted investments vs bold experiments. Shorter runways for testing new initiatives.

Operational Excellence

  • Operational excellence, coordination, and repeatability have become more important than ever. Companies succeeding have commitment, coordination, diligence on the details while still seeing the big picture.
  • Strategies like daily syncs on metrics, coordination between departments, and focusing on repeat business from within existing accounts have proven successful.

M&A

  • M&A can help accelerate growth or conserve cash, but finding appropriate deals has been challenging in this environment.
  • Some companies have acquired for equity and received cash/revenue in return. Others have used M&A strategically to enter new markets or expand offerings.

The Road Ahead

  • Macro uncertainty persists, but markets will eventually improve. Companies optimizing operations now will be in a better position when acceleration happens again.
  • The key will be having the right metrics, processes and operational discipline in place to capitalize on growth opportunities when the time comes.

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These insightful panel discussions, featuring a dynamic blend of seasoned investors and operators, offered their playbooks for repeatable revenue in growth stage technology companies. Major technological advances and a changing macro-political over the past eighteen months have resulted in a new normal for CEOs and private company investors. As we navigate these challenging yet exciting times, the wisdom imparted by these industry leaders serves as a reminder to return to core business fundamentals, and a focus on repeatable growth.

by Dmitryda