Why Some Companies Struggle With Fast Growth Post-Investment

As a private equity investor, your objective is crystal clear—maximize value across your portfolio. As a leader of a growth equity backed company, you understand that speed is a critical component to success. The board wants to see successful traction against the low hanging growth opportunities identified during diligence.  Unfortunately many companies struggle to get any sort of momentum going. Why do some companies soar post-investment while others seem stuck?  We attribute it to four main reasons. (Spoiler alert: you can control all 4 of the reasons.) 

1. Key stakeholders do not buy into the fact that future growth will require a fundamentally different approach. The “if it ain’t broke, don’t fix it” mentally runs strong in successful B2B SaaS companies, especially those that are still founder-led. The leaders and executives of these companies obviously know a thing or two about successfully growing a business, but it is critical these stakeholders acknowledge that post-investment growth will likely require a fundamentally different strategic approach.

2. The organization lacks the necessary culture and mindset for fast growth. Employees at all levels need to feel a real sense of ownership and accountability when it comes to post-investment success. It is up to the leadership to communicate a clear growth vision that has specific and measurable goals and establish a bias toward action and forward progress, even in the face of incomplete information. Calculated risk-taking is encouraged and, as a result, it is clear that small failures or wrong decisions will not be punished.  

3. Marketing is being undervalued or simply overlooked as a way to create meaningful, scalable value. Unless your portfolio company comes with leaders well-versed in growth marketing, the opportunity to deliver quick wins by leveraging underutilized assets and drive measurable growth through a well-coordinated, highly focused go-to-market strategy will remain untapped. Instead, resources will be spent (and sometimes wasted) pursuing more familiar but less effective paths to growth. For a successful growth marketing strategy, the entire organization needs to understand and believe in the potential of marketing as a growth driver.

4. The organization is pausing on strategic growth marketing initiatives until it hires a new marketing leader. On average, it takes 6-12 months to find, hire, and onboard a new leader. Waiting to find a marketing leader before building a predictable and scalable growth-marketing engine means you are wasting valuable time. If your portfolio company has existing marketing resources, it is likely that they will be tasked with pursuing every tactic that the executive team and board find interesting. This uncoordinated approach is not only highly ineffective at producing meaningful impact, but it will make the team feel overworked and undervalued. In these situations, an experienced fractional leader can add immediate value and help bridge the gap.