With all the hype and success around venture capital, high valuations (unicorns), record number of deals, unlimited angels, etc. it seems like entrepreneurs have forgotten about the power of revenue. Constantly I talk to startups that believe getting funded is as easy as taking 'candy from a baby' and a critical measure of success vs business metrics like revenue. Unfortunately they quickly realize after a few meetings that investors are concerned with traction, repeatability, talent and go to market plans.
This reminds me of a statement used by a partner in my VC days – Revenue is the best deodorant. Not only does revenue mask the smell of many imperfections, it also has a lot of benefits too:
- It's non-dilutive funding. Entrepreneurs get to grow the business without selling shares for capital. Sounds like a good business deal to me.
- It funds new and different marketing campaigns. Flexibility to try stuff or take advantage of opportunities.
- It helps hire great people. Expand the budget needed to land the candidate or show the company has excited customers.
- It can be used to accelerate discussions with partners. Nothing draws a crowd like a crowd, and leverage revenue paying customers to gets others to come along as well. The fear of missing out.
- It’s a proof point that you have a product that people are willing to pay for.
- Oh ya it attracts investors too!
Funding never closes as fast as expected. Finding great talents takes longer than needed. Things just don’t always go according to plan. A company with revenue can often times deal with these circumstances better than ones without. When revenue is available, take it all.