Measuring revenue quality

Measuring startup growth requires examining multiple interconnected metrics. It’s important not to look at any one metric in isolation, as they work together to tell your growth story. “The quality of revenue is really important, as it tells you how sustainable, reliable and repeatable a company’s income is,” Wyatt said. “It’s not just about how much revenue a business generates, but where that revenue comes from, how consistent it is and how likely it is to continue to grow.” 

Here’s why revenue quality matters: 

1. Sustainability: High-quality revenue typically comes from core operations, recurring customers and long-term contracts. This signals the company can reliably maintain or grow its revenue stream. 
2. Predictability: Recurring revenue enables more reliable financial forecasting and is more valuable than one-off sales or volatile income streams.
3. Profitability: Higher-quality revenue often yields better margins. Revenue that requires fewer discounts, lower customer acquisition costs and minimal promotions delivers stronger bottom-line results. 

The path to sustainable growth

Initially, startups may pursue aggressive growth strategies, often prioritizing rapid expansion over profitability. However, as they scale, it becomes crucial to balance growth with a clear path to sustainable profits. “Tracking key performance indicators turns abstract goals into tangible data,” Wyatt said, “making it possible to measure progress, make informed decisions and drive improvement.”

To evaluate growth rate and sustainability, businesses should focus on these key performance indicators (KPIs):

• Conversion rate: This measures the percentage of prospects or clients who complete desired actions like making purchases. High conversion rates indicate effective customer experiences and marketing.
• Customer lifetime value (LTV): This is the total profit expected from a customer throughout their relationship with your business. Improve LTV by increasing purchase frequency, improving retention rates and maximizing revenue per transaction.
• LTV/CAC ratio: This compares LTV to the customer acquisition cost (CAC). A healthy ratio of 3:1 or higher indicates profitable growth, while ratios below 1 signal unsustainable acquisition spending.

Market differences: U.S. vs. European growth rates

American companies generally reach $100 million in revenue faster than their European counterparts. On average, it takes 15.5 years for an EU-based software business to reach $100 million in revenue, compared to eight to 10 years for one based in the U.S., according to Future Government Forum’s report, Rebuilding the Nation 04: A Mountain to Scale. 

“This is due to factors such as easier access to capital, a more dynamic entrepreneurial ecosystem and a larger market size in the U.S.,” Wyatt said. 

Ecosystem building is essential for startups as they scale. A strong network helps companies learn regional best practices, navigate the complexities of the European venture landscape and connect with specialized service providers. J.P. Morgan bankers help growth companies access this critical support system through:

1. Deep sector expertise and market intelligence: There’s no unicorn “paint by numbers”—each company faces unique challenges depending on its sector and stage. J.P. Morgan provides insights into successful strategies across regions (particularly U.S. vs. Europe), providing benchmarking and comparative analysis that help companies avoid common pitfalls when scaling.
2. Strategic relationship building: J.P. Morgan can help to connect founders with specialists—from legal and financial experts to recruiters, potential team members and executive talent. The firm’s extensive network spans the small, interconnected startup ecosystem, enabling introductions that have the potential to accelerate growth.
3. Access to capital: J.P. Morgan’s deep relationships with global investors and its own financing capabilities help companies secure appropriate capital at each growth stage, identifying the right funding opportunities at the right time.

Essential strategies for accelerating to $100 million

Based on J.P. Morgan’s experience working with successful European growth companies, Wyatt identified four critical focus areas that consistently drive sustainable progress toward the $100 million milestone:

1. Team and culture: Building a skilled team is fundamental to scaling. Create a culture that values both accountability and collaboration, ensuring team members align with company goals. This foundation enhances problem-solving capabilities and drives innovation essential for rapid growth. 
2. Decision making and execution: Successful growth requires both strategic vision and operational discipline. Effective leaders set clear direction while actively leveraging board expertise to navigate complex decisions. Though planning matters, execution often outweighs perfect strategy—requiring leaders maintain focus on defined goals and adapting as the company scales.
3. Financial discipline: Maintaining a strong focus on financial management is essential for reaching $100 million in revenue. This includes strategic cash flow management, deep understanding of revenue and profit margins and efficient resource allocation. Build a finance team that balances governance with growth enablement—one that provides both control mechanisms and strategic insight. The ideal finance team not only ensures compliance but knows when to prioritize new investment versus when to optimize existing operations.
4. Relentless product and client focus: Wyatt has observed that market expansion often leads to competing priorities. “Maintaining a relentless focus on product development and client needs is essential for sustaining growth,” she said. “Be relentless in prioritization. Don’t forget the value of saying no to ideas if they aren’t priority.” This disciplined approach to product development helps businesses adapt to evolving market demands, increase customer satisfaction and loyalty and drive a long-term competitive advantage. 

Overcoming growth challenges

As companies mature beyond their early stages, they face several challenges, including:

• Maintaining momentum: Wyatt highlights that growth sustainability becomes more difficult at scale. “Growth is the goal,” she said. “In tech, there are two types of companies: Ones that grow fast and win market share, and others that die slowly and become zombie companies. There’s nothing in the middle.” As startups advance, they should consider expanding to other markets and developing adjacent products. 
• Finding the right personnel: As a company grows, leadership requirements change significantly. "The CFO who is ideal for a $10 million revenue company may not possess the same strategic capabilities needed for a $100 million enterprise,” she said. “It’s crucial to adapt and bring in the right talent to navigate the complexities of scaling.”
• Obtaining financing: European growth companies face unique financing challenges across fragmented markets with varying regulations. “Valuation issues, investor expectations and economic uncertainties further complicate matters,” Wyatt said. Successful companies differentiate themselves by clearly communicating their unique value. “Ultimately, you are going to be with your investor for seven to eight years. Don’t go with the best terms—go with the best partnership.”