Happy Galentines Day to everyone except anyone who ever dismissed a female founder's profitable business as 'just a lifestyle business'.
Profitability? I haven't heard of her.
It's hardly a secret that the UK has experienced a significant downturn in VC funding for startups over the last two years. In the opening quarter of 2023, VC investment into the UK fell to £2.9 billion (pocket change!), and it wasn't just a January resolution to shed some weight. 2023's Q3 funding went down around £320m on Q2's.
Since Capitalism gives rise to catastrophising like fertiliser to a flower, we're all hearing about it A LOT. 'Macro-economic conditions' are often cited (possibly because using the term 'macroeconomic conditions' makes you seem like you know what you're talking about without you having to actually clarify what you're talking about - don't worry, I do it too), along with vague gestures at the geopolitical chaos that's been dominating headlines for an eternity at this point.
Thousands of article inches have been dedicated to determining why this season of 'Downturn Abbey' came into existence, and now we've worked through a bit of the fear and (hopefully) seen the worst of the sloppy redundancies that followed, heads are turning towards the new star of the show: profitability.
Except profitability isn't new. It isn't even the vintage kind of 'new' that feels good for the environment but smells a little like mothballs. Since the dawn of our ecosystem, it's been the necessary reality for a lot of founders outside of the very slim demographic that devours all the funding like a Patagonia-wrapped Pac-Man.
'Minority' founders, have long focussed on profitability as a necessity, not a trend. When you don't have the luxury of burning through a bunch of someone else's cash whilst you flail around in the dark wasting time at conferences cosplaying at success until you find product-market fit (breathe, Milly), you get really good at being thrifty.
Minority founders don't just get less cash from investors, they also get less face-time to plead their case, less coherent feedback, less transparency, less of a network...
When you get less, you figure out how to do more with it (get a Fractional COO for one). You learn a lot at the precipice of financial failure. You get uniquely creative and inventive and thoughtful when you're burning from a fire that's so different in intensity to any that warm the halls of privilege.
What can we do with this focus on profitability?
If profitability is VC's sexy new trend and non-diverse founders are struggling to get their heads around it (not that long ago I sat in a Board meeting with a grown man on the verge of a tantrum because someone suggested it might not be a 'branding concern' for him to fly Economy because no-one knew who the fuck he was), why not just give more of the cash to the people who know profitability inside out?
There's a huge opportunity for VCs to invest into this existing mindset, to feed those tenacious and passionate little fires and latch onto this new 'trend' for profitability (I swear it's not the new Web3); since my mindset inhabits a dichotomous nook at the intersection of optimism and pessimism, I'll remain hopeful but unsurprised if this doesn't transpire.
In the meantime, to all the 'growth at all costs' bros, welcome to the 'lifestyle' bandwagon, I guess. Maybe try not to drive it like an arsehole?
Want to chat more about this or the realities of building for future success in 2024? Feel free to book a free Discovery Call with me today.
Comments