The Rule of 40 in HIT: Should your Company Prioritize Profitability or Growth?
March 19, 2019Among the venture capital and growth equity community, a common rule of thumb for software companies is the “Rule of 40”. The rule simply states that a healthy software company’s net profitability + revenue growth rate should exceed 40%. This rule provides a guideline to balance the trade-off between revenue growth and profitability, a question many of our clients frequently have. To see…
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