#VCs #Funding #Startups #Revenue
Hey there! 👋 So, the age-old debate continues – do VC’s only care about revenue? 🤔 I’ve pitched my startup to about 20 VC’s and it seems like the focus is always on revenue, revenue, revenue. But is that really all they care about?
I’m in that awkward pre-revenue BETA stage where I know we have a killer product, a solid niche, and a pipeline bursting at the seams. But the funds just aren’t there yet to really kick things into high gear. Anyone else been in this position before?
I’m wondering if it’s just the nature of the beast when dealing with VC’s, or am I missing something crucial in my pitches? Share your experiences and insights – I’d love to hear from fellow entrepreneurs who have navigated the VC landscape successfully!
Possible solution:
– Highlight your traction and potential for growth 💥
– Show a clear path to monetization and revenue generation 📈
– Be prepared to answer tough questions about your financial projections and ROI 🤑
Let’s unravel the mystery of VC’s together! 💡🚀
It’s the market. VCs decided they only want to invest in businesses that are AI or are basically profitable. They still want their big piece of the pie, but they don’t want the risk.
What’s the revenue model ?
VCs are not your friends and they should be funding of last resort. I am not saying they are bad people, but they are out to make big money.
Do you have LOIs? Contracted ARR? Any customers who will verbally commit to buying and willing to talk to a VC?
Respectfully, pre-revenue is dicey traction-wise. Why can’t you get even a single paying customer? The real rubber meets the road when you start trying to collect money. That’s when you learn what is just smoke versus what’s really on fire.
I agree. I’m an ex-VC raising a very small angel round. I have a MVP completed (b2b SaaS), and am piloting it with 6 businesses. I have a waitlist of over 340 companies waiting for Beta.
2 angel investors signed Safe Notes, and then disappered when it was time to wire. Another 13 said that I need to come back when I have revenue. 3 are still thinking. 4 said I’m too early, and 3 said I’m too late.
But the revenue objection is the biggest shocker. I’m not raising a pre-seed or a seed. I’m raising an angel.
In the end the customer proves if you are a winner, not the VC. They, and us to some extent, know when they can’t predict.
However there are ways to lower the risk pre-revenue.
Risk is reflected on your valuation, and the amount you need; so there should be some leeway.
But you also need to hit the stage right, you can’t expect a Series A outfit to give you money without revenue.
It’s very cyclical it seems.
We’re after our B round. Everything is about unit economics. How profitable is each new engagement, deployment.
In our A round, we were all about growth. Just grow and get top line.
Now we’re getting mixed messages between growth and profit. It’s deeply frustrating
Well, yeah. Think about it from their perspective. They know that if they fund you, 9 times out of 10 they won’t see a penny back(1/10 exit profitably for VCs, around 65-70% outright fail, with about 15-20% exiting below the valuation investors placed on the company). So, for them, they need a few big fishes to survive. It appears that your product is a niece software product, so it’s not gonna be a huge market for them to enter. So, for them, to invest in you means they have to take a lot of risk with little reward. Big no-no for VC firms. But, if you have real traction, like strong revenue, the chances of failure go SIGNFICANTLY down. I mean, the risks of failure for a company with no revenue and 500k in revenue are VERY different. They need to see something that gives them a reason to invest, and vetting doesn’t matter to VCs that aren’t big enough experts to know whether your vetting was good.
Just launch without VCs and get to ramen profit. Once you hit ramen profit, you can make the decision about where to take the company. You can go all in on funding and growing, or take a slow approach. You’re less likely to get super rich, but you generally have much more control of the company. Once you take VC dollars, you can’t let up on the gas, which can actually be more harmful to an early startup than helpful.
Believe the “no” and not the reason. You’re rarely going to get the truth as to why someone passed (vcs included) but the no is real. Revenue is a really easy “truth” they can tell you.
That being said, it’s a shit funding environment outside of big AI bets.
Focus in revenue and growth. No matter the shitty investing market, good companies can always raise.
It depends on how much confidence they have on the founding team. Usually those that can raise pre revenue funding have very successful backgrounds (successful founders with previous exits or you did some major achievements in a past company such as leading projects or breakthroughs) or in a deep knowledge space (such as PhDs in a specific tech area).
Outside of this or friends, usually you will have to show sales traction or purchase orders. Even if the idea is promising they usually don’t trust that you can execute and bring the idea into market unless you can prove it to them.
VCs run out of funds in rising rate environments. It has fuck all to do with your business in many cases. Have you tried some PEs, hedge funds, pension funds, family offices?
This year
You can actually check our platform if your business is in Africa. It’s http://www.roi.ng and venture capital firms and angel investors are waiting for you.
I am also running a pre revenue startup and have been able to raise some initial capital from friends and Angels.
I had about 10 VC meetings and the feedback has been consistent. “Come back when you have revenue”, so that’s what i’m focusing on.