We now have full year data and can say for sure: growth is back. After the low of 2023, 2024 showed real acceleration and 2025 looks even better. After a tough and unsteady few quarters, startups are finding themselves in a uniquely advantageous position. The adaptability and lessons learned from the post-hypergrowth era have equipped startups to thrive in the evolving landscape, with growth and efficiency improving simultaneously, something we haven’t seen consistently in venture, maybe ever. The data is clear and the narrative is changing: we are moving from survival mode to a growth cycle.
Key data:
- Growth is up. GAAP revenue growth rates bottomed out in 2023 but have been re-accelerating across the board into 2024. Top performers are feeling this the most, with the top decile hitting growth rates we haven’t seen since 2022.
- More companies are reaccelerating. In 2023, we saw few companies accelerating at all. We saw 32% of companies reaccelerate in 2024. That number is expected to nearly double in 2025.
- Efficiency is improving concurrently. Operating margin has been on the rise. Top decile companies are nearing breakeven and the median improving to -40% in 2024. We believe a similar trend to continue into 2025.
- Everyone is spending less. Even growth-focused startups are spending more conservatively, with an average burn multiple of 2.3x compared to 4.0x or more in the “growth at any cost” days.
A growth surge we haven’t seen in years
If you are feeling the momentum, you are not alone. GAAP revenue growth rates bottomed out in 2023 but saw a dramatic turnaround in 2024. Leading this growth are the top performers, with the top decile experiencing 132% YoY GAAP revenue growth with a similar acceleration trend across the other quartiles. Looking towards 2025, the growth is expected to continue as companies forecast continued growth. Top decile companies forecast exceeding the heights of the post-Covid hypergrowth era whereas top quartile and median companies are approaching growth rates from the bygone era.
Acceleration is real – and there is more coming
Pre-covid, a typical company grew at 85% of their prior year growth rate, and we saw less than 25% of players exhibit accelerating growth in any given year. In 2023, only 8% of companies accelerated their growth rates, but in 2024, that number jumped to 32%, marking a significant increase. Looking further back, when we compare the 2022-2023 and 2023-2024 time frames, we see 4x the number of companies experiencing accelerating growth. This trend continues into 2024-2025, with more companies forecasting accelerating growth than not. 57% of companies are expected to experience growth, aligning with the optimistic YoY GAAP revenue forecasts.
Efficiency and growth: the new power couple
Here’s the narrative violation: this time around, growth is not coming at the expense of efficiency. In fact, the two are rising in tandem. As growth returns, the improvements in operating margin show that the growth is translating into a path towards profitability. Operating margins have steadily improved across all quartiles since 2021. Notably, median operating margin improved from -60% to -41% in 2024. With margins improving alongside growth, companies are demonstrating more sustainable expansion, and forecasting that these improvements will continue into 2025.
Cost discipline has clearly remained top of mind as startups continue to operate in the era of efficiency. All quartiles and deciles for burn multiple have improved to its best level in two years, with the median burn multiple improving by 62% YoY.
Two paths forward?
As growth returns and burn multiples improve, it’s worth asking whether burn multiple looks different for startups with different growth profiles (follow Dale Chang for upcoming thoughts on this).
Two distinct playbooks for out-performance are emerging: growth-first and efficiency-first. Both can be winning strategies, but they reflect a new era of discipline that’s redefining what success looks like for venture capital-backed startups. We segmented startups into two categories: those prioritizing efficiency (top decile burn multiple) and those prioritizing growth (top decile growth).
The efficiency-focused cohort achieved an average growth rate of 35%—not quite top quartile, but solidly above the median. These companies are proving that you don’t need to burn aggressively to grow. Instead, they’re scaling with precision, maximizing output from every dollar spent.
On the other side, the growth-focused startups pushed the envelope with impressive expansion rates, but they did so with discipline. Their average burn multiple came in at 2.3x — a figure that sits comfortably between the top quartile and median. To put that in perspective, high-growth companies in frothy times used to see burn multiples in excess of 4.0x.
The message is clear: even the most aggressive growers are playing a more efficient game. These startups are chasing scale, but they’re doing it responsibly, a sharp contrast to the hypergrowth era when burning cash was seen as a badge of honor.
