Growth Company. MarketCheese

Growth Company — is a company that shows high revenue and develops faster than the other ones. As for the investments, these companies prefer to put all the money into the expanding business and not in dividends. However, these companies became very strong within several years. Nowadays, most growth companies are related to the internet and mobile technologies.

What Is a Growth Company

A growth company is usually a startup that owns an innovative product or a method to satisfy the customer’s needs quickly. This company is rapidly developing and looks very promising. Also, the growth company may be a business that has existed for a long time but still satisfies customers’ needs and attracts a lot of money. Many of today’s growth companies were pioneers in their field. If you want to invest in such a business, you need to identify whether it has the following traits.

Traits of growth company:

Growth stocks. The stocks of a growth company are highly attractive to investors. You can open the actual rating of the most profitable companies and find growth companies here at the top.
Growth industry. Promising companies are often part of a growth industry. To identify whether the company will be profitable, check the sphere of this business.
Competitive advantages. The presence of competitive advantages shows whether the company will be able to survive during turbulent times. These advantages are network effects (correlation with the number of active users), scale (size of the company), and high switching costs (high price of changing the supplier).
Significant addressable market. The growth company satisfies the needs of a huge number of people. It can be a need for fast delivery, communication, rent of housing, or car leasing. Sometimes, the growth company starts as a monopolist in a certain sector, and then other companies join and try to compete with it.

Most of the growth companies are involved in highly developing industries. These industries attract numerous investors and business angels. All you require is to identify these fields.

Fields of growth companies:

E-commerce. Digital commerce became a significant sector during the pandemic of COVID-19. It allowed numerous consumers to receive the goods which are available in the local store or to sell their goods from various places.
Social media. Social media is an essential part of today's business and commerce. It opens new stars and influencers. The rise of TikTok and Likee shows that social media still has many things to offer.
Cloud technologies. Today companies process a huge amount of data, and it’s impossible to store all this on physical servers. That’s why many companies provide services for remote work and data storage.
Streaming services. The industry of streaming services had grown during the pandemic of COVID-19, and it still grows. The streaming services became an important part of film distribution along with cinemas.
Electric transport. The ecological agenda and utilization of renewable natural resources become widespread in business. The green taxes make the drivers change the traditional cars for electromobiles. Electric transport is perceived as the eco-friendly future of the car industry.
Digital payments. The development of international trade requires the presence of services for the transactions between the contractors. Unfortunately, traditional bank transfers aren't always possible. In this case, the entrepreneurs can use third-party services.
Pharmaceuticals. The rise of epidemics like COVID-19 and monkeypox shows that humanity still has dangerous diseases to fight with. A pharmaceutical company that can offer the appropriate decision against a certain illness increases its investment attractiveness manyfold.

Examples of Growth Companies

It is necessary to distinguish between a mature and a growth company. The mature firm has a stable niche, and it doesn’t plan to expand. The growth company always tries to invest in new fields and search for new markets. That’s why there are many well-known companies among the growth ones.

Famous growth companies:

Tesla. This company develops electric cars and solutions for electric energy storage. Currently, the company management pays attention to the development of electric trucks and electric taxis. It is expected that the robotaxis will completely change the industry of car sharing.
Amazon. This is a major e-commerce company that sells different goods around the world. Amazon started as an online bookstore and then, the company started to sell mp3 files, video games, software, and other things. The company supports several sites in other countries and works with numerous brands.
Google Inc. This is a transnational corporation within the Alphabet holding that invests in Internet search, cloud computing, and advertising technologies. The main products of this company are the search engine Google, mail service Gmail, browser Google Chrome and the mobile operating system Android.
Meta Platforms Inc. (ex-Facebook). This transnational holding company owns two social media companies — Facebook and Instagram, messenger WhatsApp, and the brand Oculus. The company invests in the creation of the meta-universe — a digital world where people can work, sell and socialize.