Our very own Kelly Ford recently joined Nasdaq Global Markets Reporter Jill Malandrino to discuss the release of our fifth annual Growth Index, and traits associated with fast-growing companies. She also spoke Edison Edge and her views on the private market investment environment.
Following is a transcript.
On the Growth Index Study and what it measures:
This is our fifth year doing this study. We look at growth-stage tech companies shy of $10M in revenue up to >$50M. We examine the top and bottom line characteristics and the different value drivers that are at play for companies at this stage and cull out the characteristics that separate fast growers (those with 30%+ top line growth), versus their slower grower peers. What's also interesting, is that they're truly growth stage companies focused on using multiple value drivers; and even though the revenue of these companies is relatively small, they're not your early stage, VC-backed, growth 'at all cost' companies. They're companies that are focused on scalable growth and therefore focused on using multiple drivers at once, versus growth at all costs.
On the key traits of fast growing companies:
From a top-line perspective, the old adage applies, 'you gotta spend money to make money', so no surprise that fast growers spend 100% more, as a percentage of revenue, than slow grower peers in Sales and Marketing. They also spend 6x more once they've sold a customer making them successful with their product.
Fast growers are also very good at capturing maximum value with their customer contracts - 75% more on average than slower growers, and they do it through strategic pricing. They're value - focused and are good at not only landing customers, but growing them over time.
On Edison Edge:
With our investment, Edison companies gain access to Edison Edge, our firm's operating platform. It's powered by former operators, who have worked in high-growth environments, and focuses on best practices and executive education for growth, scale and leadership. Another aspect of the Edison Edge platform is board director development, which is pretty unique in this industry. We have a pretty big focus on what makes a great board director and how to use the board as a strategic weapon.
On the current climate of private equity:
Exciting times for sure... lots of capital sloshing around. It's competitive. Valuations are high and capital is being deployed faster than ever.... we're seeing investors that are proposing marriage on the second date with some of these companies, and we don't see this changing. As long as the CEOs of these high-growth tech companies continue focusing on the right fundamentals to build and optimize their business, they will continue to have this kind of optionality.