Everything you ever wanted to know about fast growth but were afraid to ask

Everyone in startup world on all sides of the table wants fast growth for as long as possible. While we all want that, and some do get that, fast growth has certain implications on how to build and operate a project that I seldom find discussed, especially in regulated industries such as finance (IMO applies to healthcare and defense too).

For the sake of clarity, I will qualify fast growth as a startup growing its revenue by more than 100% a year after passing $1m in annual revenue.

• To be able to bring in a couple to several millions in new revenue a year at that stage, the primary hurdle in regulated industries is that sales and partnership cycles commonly are north of 18 months.

This is not just about 2B, 2C has the same hurdles because when you grow really fast with consumers in a regulated industry, you are going to need those enterprise acquisition and/or distribution platforms too.

A lot of planning and know-how is required to build the necessary pipeline, support that pipeline for a protracted period as logos reach the bottom of the funnel and then move into Day-0 / Day-1.

That in turns has implications on product, ops, and team.

• From my experience both on the public, startup and investor sides, to even stand a chance at having a conversation with certain institutional clients or partners, the degree of maturity expected of the product is much higher than outside of regulated industries. The same goes for the ability to successfully move these logos through the pipeline.?This hurdle on product has been getting higher in the past year, as regulators and macroeconomic drivers both press harder on the space.
• Necessarily, a more comprehensive regulatory and operating strategy becomes needed. More fleshed out compliance and ops functions, more licenses, more audits.
• Consequently, more senior talent is needed across more functions. In several cases, that talent needs to be brought on more than a year ahead to make sure that ops, and product can be where they need to be when the GTM needs them to be.
• At that point, I am going to state the obvious: all of this means more time and more cash are needed to get to that stage where a fintech (or other regulated industry) startup can grow fast for at least a couple of years. A sharper vision, strategy and roadmap are needed from the founders to convince that senior talent (among other reasons) at even earlier stages than what is commonly observed outside of regulated industries.

Taking a step back, one could ask whether such undertaking really makes sense in a repeatable manner in regulated industries. The answer is a resounding BRUH. Winners in regulated industries have one striking difference from those in other fields: they either sit in much larger addressable markets, or they can achieve much larger market shares.

• Finally, we need to talk about what to do when things go wrong. Founders, operators and builders have a lot less time to identify and remediate something wrong when growing fast and with the aforementioned operating realities.

A company growing 2x a year fundamentally changes every 6 months. That leaves at most 12 weeks to identify and remediate a problem. A company growing 4x a year will have no more than 6 weeks for this problem identification and remediation. Taking much longer does not necessarily kill it, but it will put that company way off track for up to 2 years. I have witnessed each of these outcomes in fintech: the good endings where the issue is identified and remediated within 6 weeks, the 18 months delay, and the game over.

I have formed the very strong belief that as an investor, this is where most of your attention should be directed to help your supersonic portfolio companies. With the opportunities that lay in front of us in fintech, it is an historically exciting time to build.

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