The Ultimate Guide to Growth Fundraising: How to Secure Funding from Series B Onwards – Christian Resch, Goldman Sachs

About this episode

Christian Resch has managed Goldman Sachs' multi-billion dollar Growth Fund for 17 years, investing up to $250 million per startup. In this conversation, he explains what makes startups attractive to growth investors and how founders should position themselves in today's market.

What Makes Startups Attractive to Goldman Sachs?

Goldman Sachs focuses on companies that have already built a solid foundation and are ready for their next growth phase. "We work with startups that have already proven their business model works and is scalable," explains Resch. This isn't just about pure revenue numbers, but about sustainable growth patterns.

Team quality is particularly important. A promising management team must bring both strategic vision and operational excellence. "We look very carefully at whether the team can master the challenges of scaling," says Resch.

The Critical KPIs for Growth Relevance

Founders should monitor certain metrics to recognize whether their startup is already growth-relevant. Not all KPIs need to be 100% fulfilled – what matters is the development trend and potential.

A central point is profitability. There's often confusion among founders here: it's not about being fully profitable already, but about being able to show a clear path to profitability. "Unit economics must work, and we need to see that the company can become profitable when needed," explains Resch.

Challenges in Today's Growth Market

The growth market has changed significantly in recent years. Founders must prepare for more rigorous due diligence processes and more critical valuations. "The market has become more selective. Startups today need to show stronger fundamentals," warns Resch.

Companies with valuations from previous years that seem too high by today's standards face particular challenges. Goldman Sachs recommends a realistic revaluation and focus on operational improvements rather than defending valuations.

The Right Approach for Growth Investors

Approaching growth investors should be done strategically. Previous lead investors can often help establish the right contacts. "A warm introduction through existing investors is usually more effective than a cold pitch," explains Resch.

The management deck is crucial here. It should not only present growth numbers but also show concrete plans for using the funds and realistic milestones.

What Changes After a Growth Investment?

With a growth investor like Goldman Sachs, the company dynamics change. Expectations rise, and there's increased focus on scalable processes and professional corporate governance.

"Sometimes we find that the management team needs to be expanded or strengthened for the next growth phase," explains Resch. This isn't failure, but a natural part of company development.

Red Flags and Warning Signs

Goldman Sachs particularly watches for certain warning signals. These include unrealistic projections, weak unit economics, or team problems. "When the numbers don't match the story or when we have doubts about team cohesion, we become very cautious," warns Resch.

M&A and Strategic Options

An interesting aspect is the role of M&A strategies in growth funding rounds. Founders should certainly mention possible exit scenarios, but not use them as the main argument. "M&A can be an option, but we primarily invest in organic growth," Resch clarifies.

Practical Recommendations

For founders seeking growth financing, Resch recommends the following steps:

• –Develop realistic valuation expectations
• –Demonstrate strong unit economics
• –Show a clear path to profitability
• –Build an experienced management team
• –Network through existing investors

While the growth market may have become more challenging, opportunities for successful financing remain intact for well-prepared startups with strong fundamentals.

Banking Crisis Lessons

Following the problems with Silicon Valley Bank and others, Goldman Sachs advises portfolio companies to diversify their banking relationships and maintain stronger cash management practices. "Risk management has become even more critical," notes Resch.

The current environment demands more sophisticated financial planning and greater attention to operational efficiency, but it also creates opportunities for well-managed companies to gain market share and attract top talent.