Growth % + profit % ≥ 40
Growth without efficiency stopped being an advantage.
Investors have stopped paying for revenue that arrives at an unsustainable cost. This is the benchmark they use, and the one behind it that says what your burn actually bought.
Rule of 40 and burn multiple
Rule of 40 score
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Above the bar.
You are in the half of the market that takes a clean valuation. The thing to protect now is the mix: a score held up entirely by growth gets fragile the moment growth slows, because the margin has to appear in the same quarter the growth disappears.
Close, and closeable.
Under 40 but within reach of it in a year of deliberate work. The usual lever in this band is not more growth — it is gross margin, and the COGS calculator is where that starts.
Below the bar, and priced accordingly.
Companies that fail this benchmark face a valuation discount of 25 to 40%, regardless of the technology or the team. You have a decisive choice: accelerate growth without adding cost, or cut cost to protect margin. Doing neither is also a choice.
- Revenue growth
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- Profit margin
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- Gap to 40
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Burn multiple
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If the gap is the operating layer, not the market
Most companies under 40 do not have a growth problem. They have a cost structure built for a smaller company and never rebuilt. That is the conversation the clarity call is for.
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