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Interesting. Due to the seed explosion (which is absolutely a good thing, more entrepreneurs trying new stuff) Series A has indeed become very challenging -- ex

Interesting. Due to the seed explosion (which is absolutely a good thing, more entrepreneurs trying new stuff) Series A has indeed become very challenging -- extremely challenging, even. Rather than raise more seed, we decided to buckle down and try to fund through paying customer growth. Slower of a curve than a 2 or 3 million dollar injection, but no strings attached either. And I figure you need to develop your billing and customer chops eventually anyway, so why not start building those skills now?

wpietri 11y ago
Bravo! I occasionally mentor at startup events and I can't tell you how crazy it makes me when first-time entrepreneurs look down on getting revenue as some sort of grubby detail not quite worth their attention. I love it when people go after actual customer money; it forces them to pay careful attention to the heart of the business. There is a risk, though. (I'm sure you know it already, but I mention it just to balance out my enthusiasm for others.) If a company's revenue is $0, investors can imagine anything they want. But if revenue is $1.39, investors may be subject to an anchoring bias [1]. I don't think that's a huge risk for companies that have a well-understood business model; if you are selling annual software subscriptions, it's pretty easy for investors to imagine scaling that up. But I think Twitter and Facebook were smart to avoid revenue for a long time because it let them sell the dream. [1] https://en.wikipedia.org/wiki/Anchoring https://en.wikipedia.org/wiki/Anchoring
- gavazzy 11y ago
  > "What, revenue? no, no... no revenue! Why would you go after revenue? No, if you show revenue, people will ask "how much?" and it will never be enough. The 100x'er or the 1,000x'er will now be the 2x dog. But if you have no revenue, then you're pre-revenue. https://www.youtube.com/watch?v=BzAdXyPYKQo https://www.youtube.com/watch?v=BzAdXyPYKQo
  - wpietri 11y ago
    Wow, that's a little too good. I'm think going to save watching Silicon Valley until I'm retired so that I can experience it as comedy rather than horror.
  - lmeyerov 11y ago
    Sad but true. OTOH, while 1-2M/yr can be bad for VCs, that feeds quite the team, and thereby shifts the leverage if you don't crazy burn.
tzm 11y ago
Excellent point. This also helps to align the the "culture" of fundraising towards healthy business fundamentals.

wpietri 11y ago

Bravo! I occasionally mentor at startup events and I can't tell you how crazy it makes me when first-time entrepreneurs look down on getting revenue as some sort of grubby detail not quite worth their attention. I love it when people go after actual customer money; it forces them to pay careful attention to the heart of the business. There is a risk, though. (I'm sure you know it already, but I mention it just to balance out my enthusiasm for others.) If a company's revenue is $0, investors can imagine anything they want. But if revenue is $1.39, investors may be subject to an anchoring bias [1]. I don't think that's a huge risk for companies that have a well-understood business model; if you are selling annual software subscriptions, it's pretty easy for investors to imagine scaling that up. But I think Twitter and Facebook were smart to avoid revenue for a long time because it let them sell the dream. [1] https://en.wikipedia.org/wiki/Anchoring https://en.wikipedia.org/wiki/Anchoring

gavazzy 11y ago
> "What, revenue? no, no... no revenue! Why would you go after revenue? No, if you show revenue, people will ask "how much?" and it will never be enough. The 100x'er or the 1,000x'er will now be the 2x dog. But if you have no revenue, then you're pre-revenue. https://www.youtube.com/watch?v=BzAdXyPYKQo https://www.youtube.com/watch?v=BzAdXyPYKQo
- wpietri 11y ago
  Wow, that's a little too good. I'm think going to save watching Silicon Valley until I'm retired so that I can experience it as comedy rather than horror.
- lmeyerov 11y ago
  Sad but true. OTOH, while 1-2M/yr can be bad for VCs, that feeds quite the team, and thereby shifts the leverage if you don't crazy burn.

tzm 11y ago

Excellent point. This also helps to align the the "culture" of fundraising towards healthy business fundamentals.