One Potato, Two Potato – Why Revenues Are So Important

OK. You’ve heard it a thousand times. Show me the money.

Having been surrounded by entrepreneurs, 24/7, for the past year and a half I’ve seen hundreds of projects and as many founders. For the most part they all have passion, smarts and in many cases a reasonably well thought out idea that they could pitch reasonably well.

So, imagine you’re a VC (not an Angel – we’ll talk about Angels some other time), a VC with a fund you have to invest. You see maybe 1,000 or 2,000 deals a year. maybe even hear 200-300 pitches a year. How are you going to make a decision?

It’s almost impossible. They all sound good. Sure you can screen out the ones with bad pitches but now almost everyone has learned to pitch with 12 slides. They all say the same thing in their own way: best technology ever, huge market, great team, wonderful opportunity, can’t miss, and on and on an on.

They all can’t be right. So what are VCs do? They tell the promising startups to keep in touch.

It means get in touch with us when you’ve got revenues.

Wait you say. If I have revenues, I don’t need a VC. Maybe you don’t. Or maybe you need funding to grow faster. No way a bank is going to touch you. Maybe you can get an SBA loan. Maybe. You’re only choice are VC’s. That’s the niche they serve. Everyone thinks VC’s fund new technologies. Sure. But here’s the full sentence: they fund new technologies that have already shown promise by already showing revenues.

They do one other thing really well. They fund teams that they think can hit the technology out of the ballpark even before revenues (Think Google). But unless you’ve got a killer team, go for revenues. It will be faster ’cause once you have revenues the VC will find you.