By Dale Chang
The world of startups in 2025 is a bit like the famous poem by Robert Frost, “The road not taken”. Two paths diverge in a wood, and the startups stand at the crossroads by deciding to follow which to follow.
Today’s decision is not only “growth” in the abstract; It’s about how to grow. On a track is the search for higher growth forecasts at the cost of efficiency – previously the de facto mode for the growth of startups. On the other hand, a more measured approach takes shape – slower growth but with hermetic efficiency, sometimes even reaching the sacred soil of cash.
Here is what the paths look like:
High but lower growth: The fastest growth companies (200%-Plus in annual sliding) favor the expansion of income, often with significant cash burns. These companies show multiple burns above 2x and operating margins below -150%, which makes them dependent on external capital.
Lower but higher efficiency: The slower companies (20% to 30% in annual sliding) are focused on financial discipline, making multiple burns below 1x and approaching the cash profitability threshold. These startups exchange speed for resilience, the maintenance of longer tracks and optionality on uncertain markets.
While we hold at the dawn of a new era – a shaped not only by the booms induced by the pandemic, the macroeconomic uncertainty and the tightening of the capital markets, but also by a frenzy that renamed the industries at a frantic pace – this choice shapes the strategies of the founders and operators.
The lessons of recent years merged with a whirlwind of technological transformation, demanding both prudence and daring to an equal measure.
High growth with low efficiency
We cannot deny the attraction of the path with strong growth. For companies on competitive markets or the creation of new categories, scaling quickly to capture the market share may look like the only option.
This is particularly true for many new AI companies, which pour significant resources into growth to establish themselves as market leaders in a rapidly evolving space. However, this strategy has a cost: efficiency.
Our ladder analysis studio of startups through the round groupS reveals a clear trend: companies with the fastest growth (200% growth in annual sliding) are much less effective. On average, these companies declare multiple burns above 2x and median operational margins of around -150%. Although they provide growth in the reproduction, the compromise is not durable.
For example, companies in this category often spend $ 2.50 to $ 3 for each $ 1 of new rounds, a ratio that becomes problematic if growth slows down or time between increases increases, as has been done in the past two years.
Growth measured with great efficiency
At the other end of the spectrum, companies adopt slower and more deliberate growth with annual growth in the range of 20% to 30%, a significant break compared to the era of the hypergrow. These companies optimize for efficiency, often achieving multiple burns below 1x and operational margins near the profitability threshold (or even operating profitably).
For example, companies in this category often spend $ 1.25 to $ 1.50 for each $ 1 of new rounds – a more sustainable ratio for slower and more efficient companies. Although this approach sacrifices a certain high -level acceleration, it provides a cushion against fundraising challenges and ensures better resilience in periods of macroeconomic uncertainty.
Balance growth and efficiency: a new manual emerges
While companies with the fastest growth often accept ineffectiveness as a by-product of their continuation of the scale and the slowest companies prioritize operational discipline, a convincing common ground is becoming. Companies that develop in the range of 20% to 40% in annual shift trace a new course, experimenting with means of reviving growth without losing sight of the efficiency.
Scale’s reference analysis shows that these half -growth companies (30% to 50% in annual shift) reach multiple burns between 1.5x and 2x – an ideal place that balances a robust scaling with budgetary liability.
This group reflects a broader change in the software market: a deliberate effort to reactive growth while maintaining the operational railing that investors require.
Interestingly, many of these companies were the poster for children with discounts at the start of the stricter markets, prioritizing survival to growth. Now, they carefully test waters, reinvesting in areas such as product development, marketing and selective hiring experiences.
The goal? To increase speed while avoiding the traps of the pre-countryic mantra of “growth at all costs”.
These companies understand that sustainable growth does not concern the choice between speed and efficiency – it is a question of mixing both, of the development of a strategy that can resist uncertainty while capturing opportunities.
Ahead
In 2025, the road you choose – growth or efficiency – will not only shape the trajectory of your business, but also its ability to navigate the twists and turns of a constantly evolving software landscape. But, whatever the strategy you go with, the macro conditions remain.
Investors pay more attention to efficiency, which means that the founders must also have it on their radar. The divergence of strategies between growth and efficiency may seem striking today, but Whisper For 2025 suggest convergence. In the landscape of startups, companies are moving towards a sustainable scaling, balancing reactive growth and improving efficiency.
Dale Chang is the operational partner at Scale Partners Venture. In addition to managing the platform function, it provides advice on evolution of marketing strategies, including the supply of best practices and data reference through the wallet. He sits on the board of directors of Global VC platform communityA non-profit organization representing more than 2,000 members in nearly 1,000 venture capital companies worldwide.
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