TROUBLESHOOT: 'Does it make sense to postpone profitability to scale revenue?'

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Question from: Shantanu Singh Chauhan, co-founder, Startup Arena, a B2B marketplace
My startup is growing at a steady rate of 20% month-on-month in revenue. We hope to be EBIT positive in a year or so.However, if I need to scale fast, I may have to move my profitability milestone by eight months. Does it make sense to postpone profitability to scale revenue? How do investors see this?
Shantanu Singh Chauhan, Startup Arena
Answer by: Alok Mittal, angel investor and CEO, Indifi Technologies
I see great potential in the B2B service sector, more if you are able to navigate the complexities. If your business is growing at 20% month-on-month, then it is worthwhile to maintain that level of growth momentum. At the same time, having a clarity on capital allocation and hence, a positive CLV (customer lifetime value), is important.
Alok Mittal, Indifi Technologies
Very often, when you try to scale up fast, you could burn more money on each customer rather than invest in real growth mechanisms that are actually required to scale. As an example, if there is evidence of location-specific profitability, then more locations may be opened. Similarly, if there is evidence of salespeople turning profitable in a defined time period, then a sales ramp-up may be accelerated. This is preferable to providing more discounts to acquire more customers.
I would also advise you to leverage incremental capital to infrastructure and future capabilities, rather than have a scenario where CLV is negative and every new customer brings losses to the company. At this stage, focusing on profitability is an important aspect that an investor would consider.