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You're partially right, although this is outside the scope of my article. The article is simply stating that it's easier to find any investment (debt or equity

You're partially right, although this is outside the scope of my article. The article is simply stating that it's easier to find any investment (debt or equity) when you have revenue. Ironically, its easiest raise money when you're already making it. Regardless, there are still good reasons to seek VC investment when profitable. Several YC startups are going down that path. A bank might lend you $10-50k if your net is $2k/month while a VC might invest $1-5 million.

gcheong 18y ago
"Ironically, its easiest raise money when you're already making it." I don't think it's ironic at all. VC investment involves a risk calculation, profitability means a lower risk but in return the VC should be willing to accept a higher valuation.
pclark 18y ago
How true is this? I'm not doubting you, just curious for other opinions. We're raising money currently, and our investors have told us that revenues would come quite distant in terms of variables on if they'd invest. They love a great team, a huge user base and a lead on the market. Sure, having revenues extends your runway, but most investors seem to be of the opinion "users now, profits later". I guess my question is, would a VC prefer a massive unmonetized user base, or a much smaller user base with revenues?
sho 18y ago
"Regardless, there are still good reasons to seek VC investment when profitable." Oh I agree of course. VC will be judging you on future potential; a bank will be judging on current performance. If you need a million dollars to really scale up, you need the VC. Facebook or Youtube come to mind, they could have never achived what they have without VC. But if you don't need the huge cash injection, if you just need to incrementally ramp things up slowly, then VC is not your only option; that's all I'm trying to say.
- medianama 18y ago
  I am not convinced that Facebook needed all the money that they've spent to reach this level. What do they need money for?
  - sho 18y ago
    Early on they needed money, and a lot of it, for servers. They were highly cashflow negative and realistically only VC or outright acquisition could have paid for it. A case could certainly be made that they took too much money, and I would agree with that, but they did need money from somewhere.

gcheong 18y ago

"Ironically, its easiest raise money when you're already making it." I don't think it's ironic at all. VC investment involves a risk calculation, profitability means a lower risk but in return the VC should be willing to accept a higher valuation.

pclark 18y ago

How true is this? I'm not doubting you, just curious for other opinions. We're raising money currently, and our investors have told us that revenues would come quite distant in terms of variables on if they'd invest. They love a great team, a huge user base and a lead on the market. Sure, having revenues extends your runway, but most investors seem to be of the opinion "users now, profits later". I guess my question is, would a VC prefer a massive unmonetized user base, or a much smaller user base with revenues?

sho 18y ago

"Regardless, there are still good reasons to seek VC investment when profitable." Oh I agree of course. VC will be judging you on future potential; a bank will be judging on current performance. If you need a million dollars to really scale up, you need the VC. Facebook or Youtube come to mind, they could have never achived what they have without VC. But if you don't need the huge cash injection, if you just need to incrementally ramp things up slowly, then VC is not your only option; that's all I'm trying to say.

medianama 18y ago
I am not convinced that Facebook needed all the money that they've spent to reach this level. What do they need money for?
- sho 18y ago
  Early on they needed money, and a lot of it, for servers. They were highly cashflow negative and realistically only VC or outright acquisition could have paid for it. A case could certainly be made that they took too much money, and I would agree with that, but they did need money from somewhere.