CFO Survey: Navigating toward growth

Even for growth-stage companies, finding the right balance between growth and profitability is a constant tradeoff between short-term financial health and long-term opportunities. Over the past couple years, CFOs turned the dial toward profitability, working to preserve cash, reduce debt, and build financial resilience as they weathered market volatility, economic uncertainty, and a challenging fundraising environment. Now priorities are beginning to shift. As optimism rises, growth is back on the front burner. Here’s a look at what’s on financial leaders’ minds and agendas in 2024. 

You can explore the full survey results, and filter by region, sector, and stage, via Sōzō Pulse.

Perhaps the clearest indication of a mood shift at growth-stage startups is this: The imperative to prioritize profitability above all else has eased significantly. Just 14% of CFOs who responded to our 2024 CFO survey said they are putting profitability ahead of growth, down from 40% who did so over the past year. The willingness to ramp up investment in growth coincides with a more upbeat view of the economy across the globe, with 54% of CFOs saying they are more optimistic than a year ago, more than double the number who said so in 2023.

“Startup investors pulled back over the past two years, forcing companies to do all they could to reduce costs and extend their runways,” said Randall Stross, an emeritus professor of business at San Jose State University and the author of several books on entrepreneurship in Silicon Valley. “With the economic outlook improving, growth-stage companies are going back to doing what they do best: investing for growth.”

Prioritizing strategic growth

That doesn’t mean CFOs are contemplating growth at all costs. Instead, 66% said they plan to balance profitability and growth, a prudent approach given continued uncertainty about the economy and the direction of interest rates. 

“The days of growth at all costs, easy fundraising, delaying profitability for another two quarters, or another two years, are decidedly over,” said Navneet Govil, SoftBank’s Executive Managing Partner and CFO. Looking ahead, he said that measured growth balanced with a continued focus on profitability will be key.

InMobi, a global technology company specializing in both B2B advertising technology and consumer technology through its unconsolidated subsidiary Glance, embodies today’s more upbeat mood. “Our core advertising business, InMobi Advertising, has been profitable for many years,” said CFO Marc Steifman. “We’re now focused on sustaining and driving profitable growth there.” In terms of user acquisition and global distribution — plus new features in the product — InMobi is now in what he calls “hyper-growth mode.” That includes significant and untapped global opportunities with InMobi Glance, which offers an AI-powered smart lock screen for Android phones that displays content and ads. “In the consumer business, we initially focused on building our user base in Asia,” Steifman said. “In 2023, we expanded into the United States and Japan. We’ve also established a presence in Latin America, and will continue exploring new markets.”

Buser, a travel company that offers affordable bus trips between cities in Brazil, is another case in point. “Last year we focused mainly on efficiency,” CFO Júlia Salgado Chagas said. That’s in large part because the past few years have been challenging for startups in Brazil, given high interest rates that have contributed to lower venture capital funding. 

Now, Buser is operating in a markedly different environment. CFOs in Latin America reported the most pronounced shift in mood, as the number who prioritized profitability over growth dropped from 52% a year ago to just 5%. Meanwhile, 91% of companies in the region say they are now balancing the two. “CFOs prefer to live in moments where we can equalize both,” Salgado Chagas said. 

“There’s a lot to be done here,” Salgado Chagas said, “and a lot of growth to be captured. Our investors are aware of that. It’s our job to keep pushing and doing our best so that we can deliver.” And despite uncertainties that include changing tax regulations in Brazil, she’s finding the current ecosystem to be in better shape. “It’s a more diligent ecosystem,” Salgado Chagas said. “And a healthier one, too.” 

Rising optimism

Govil said he is thrilled to see sentiment swing back toward optimism. “2022 and 2023 were among the most challenging years in venture over the last two to three decades.” But now that the IPO window, one of the main drivers for the improved outlook of CFOs, has inched open, “optimism naturally returns,” he added. 

Interestingly, the U.S. is the geography with the most CFOs planning to prioritize profitability over growth, with 22% saying so. It’s also the one with the most CFOs planning the opposite, with 32% saying growth is the priority. Meanwhile, 46% are planning a balanced approach.

As CFOs put a renewed focus on growth, they’re primarily looking to organic expansion. Among those surveyed, 61% plan to grow organically over the next 12 months, compared with 47% who said so a year ago. 

That includes Buser’s Salgado Chagas, who is planning to invest in new routes, an improved pricing model, and more efficient marketing. The company is also tapping into the increased ubiquity and affordability of AI to create even better shopping and customer service experiences. Salgado Chagas is also part of the 32% of CFOs who told us that they intend to expand into new product offerings this year. “That’s very strategic for Buser in the future,” she says. 

Looking ahead, Steifman expects InMobi’s growth to be primarily organic. “We’re focused on engineering core platforms that both consumers love and advertisers find differentiated,” he said. “The growth will naturally follow.” The rise of generative AI has opened new opportunities for InMobi in its advertising and consumer tech businesses. “The generative AI applications we’re developing can generate personalized images for users, connect them with brands, and enable real-time shopping,” Steifman said.

Keeping an eye on M&A

But CFOs are also expecting an increase in consolidation, with 59% saying M&A activity in their sector will pick up over the next year. That’s up from 30% who said so last year. 

“We’ve seen M&A enable significant innovation, benefits to consumers, enhanced top-line growth, and shareholder value creation for portfolio companies,” Govil said. M&A, he noted, is not only a vehicle for growth, but also a core exit strategy. “Last year, for example, one of our fintech investments, Pismo, was acquired by Visa for $1B,” Govil said. “And for companies, especially entrenched incumbents, inorganic growth is the best way to expand into new business lines or strengthen existing ones.”

InMobi remains open to strategic, additive acquisitions, primarily to enhance its tech stack rather than increase scale. “We see ourselves as a platform company,” Steifman said, “and have successfully added great products and teams through acquisitions over time.” 

In all, 68% of the CFOs said they plan to grow organically or through M&A (or a combination of both, up from 63% last year). The increase is good news for venture-backed companies overall. Said Govil: “Growth demonstrates product-market fit, robust go-to-market capabilities, a good management team, all key to attracting future investment.”