When Investors Really Care About Profitability

Name: When Investors Really Care About Profitability
Uploaded: 2023-10-04T14:15:03+00:00
Duration: 7 s
Channel: Jason M. Lemkin
Description: In this video, Jason M. Lemkin explains how investors' interest in profitability varies by startup stage. Early‑stage investors (seed and Series A) focus…

4 Oct 2023 · 0 min

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In this video, Jason M. Lemkin explains how investors' interest in profitability varies by startup stage. Early‑stage investors (seed and Series A) focus primarily on achieving product‑market fit, growth, and margin improvement rather than immediate profits. Conversations about a clear path to profitability typically arise only after a company has moved beyond Series B funding, when investors start to evaluate long‑term financial sustainability. Lemkin also cites typical revenue benchmarks for Series A companies—roughly $5 million to $10 million in annual revenue—as a reference point for when profitability discussions become relevant.

Yeah. So maybe is the question that will investors actually even care about profitability? We're not going so far that early-stage investors care about profitability.
Like once you're past post-Series B.
Yeah.
That's when you're having the conversation about at your board, with your board and your investors about path to profitability. Yeah, I would say for the, for like seed and A, I think seed is about ship your product and get to product market fit. Right. And start to get a sense of what the margins of your business are, who your target, like who's your ICP. B, and do they love it? Right. And then A is really like, you know, can you get from, you know, let's say, you know, from post-seed, let's say if you're at $1.5 million or $2 million when you raise your A, then you probably need to get to between $5 million and $10 million in revenue during your A, which is a change from where we were.