Growth is no longer enough

Over the past few years, technology companies, fuelled by the pandemic, have been playing an increasingly important role in everyday life. This boom saw many companies crowned as unicorns, thousands of hires made, and new markets opened up, all in a very short time.

However, many tech companies have developed in an unsustainable way, showing exponential growth at the cost of uncontrolled spending. Growing without generating profits was possible thanks to the high liquidity of the market, i.e., the large amounts of venture capital that funds were willing to invest in startups. In fact, in 2021, global venture capital investment in this sector reached $137.8bn, up from $57.7bn in 2020, according to Dealroom.

The situation has changed dramatically. Previously, the main indicator of how attractive a startup was, as well as its valuation, was growth. However, with rising interest rates and the Ukraine war, investors are becoming much more cautious about investing in startups, as they are concerned that they themselves will find it difficult to raise their own capital, so they value profitability as much, if not more, than exponential growth. This is why companies that have grown sustainably and are therefore not dependent on constant capital injections to run their business have become the desire of all investors.

Spanish scaleup Tiko: an example of sustainable growth

As a technology company, Tiko is in an advantageous position. Since its foundation, the Spanish Proptech has had the maxim of sustainable growth, showing the best unit economics in the industry, before starting its international expansion.

One of the keys to this sustainable growth has been technology, which has allowed it to process a very high volume of applications, equivalent to 30% of the transactions that take place in the cities where Tiko is present.

 "We are in a safe sector, people always want to buy and sell houses, especially in the markets where we operate. In fact, every nine minutes we receive a new request for an offer on a new property from an individual," said Sina Afra, CEO of the company.

Thanks to its technological and team efficiency, in the first five months of 2022 alone Tiko has reached 2021 total revenues with a gross margin of 15.1%, a record figure that surpasses Opendoor, the leader in this vertical in the US, which closed the first quarter at 10.2%. "Fast growth is no longer enough, a startup needs profits to survive in this new scenario," says Afra, who also reveals that they have a positive cumulative EBITDA so far this year, which will allow them to emerge stronger from this new cycle.

"We act, we don't react. We are prepared for whatever may happen and we prefer to grow more slowly, but making profits and making sure that it is sustainable growth, which does not endanger the company or the team", concluded Afra. This doesn’t mean the company hasn’t scaled, in fact, they are growing with over 230% YoY.