Good old fashioned revenues are making a comeback of sorts, not that they ever went out of fashion.
I earlier wrote that Traction is Job 1. Ash Fontana’s presentation is getting a lot of press these days. Sales often are more important than product or team as a factor in VC evaluation. It’s certainly critical in reducing risk.
At BAE Investments & Workshop we see a wide range of startups from concepts to those seeking several million dollars in funding. You don’t have to have revenues. Our program helps plug holes like that. But there is no denying that traction is and has always been important.
Indeed revenues are becoming currency in deals. The Next Stage of Angel Investing: Revenue-based Funding from the Texas Entrepreneur Network highlights revenue sharing as an emerging vehicle for startup funding. Typical deals have a 3 to 5% revenue share that’s capped at a 3 to 5X return. It’s venture capital meets factoring.
The run to cash is a natural economic response to the changing capital markets. Demand has increased with the rise of self-funded and angel startups, while later stage money continues to tighten with diminished IPO and VC markets and low returns. It’s why many angels today have moved to real estate deals.
If you’re an entrepreneur, the question is how well are you positioned for revenues? If you wait until you start looking for VC money, you’re too late.
The tech culture today is tightly focused on product, as it should be. As I noted in Exponential marketing VC Fred Wilson proclaimed “Marketing is for companies who have sucky products.”
But it’s becoming increasing clear that revenues are just as important. A revenue strategy needs to be designed and executed earlier rather than later in your startup’s development. That’s exactly what we do at Power CMO where we work with both investors protecting their investments and entrepreneurs. We couple innovative revenue-focused marketing strategy with a marketing system for regular, reliable, and scalable revenues. Give us a call at (972) 200-3490 to see what we can do for you.
Are you cut out to be an entrepreneur?
Published August 30, 2011 Bootstrapping , Commentary , Entrepreneurs/Startups , Funding , Q&A Leave a CommentVince writes:
Vince,
Entrepreneurs can be any age. Don’t believe the myth that young people make the best founders. Adeo Ressi combats ageism in Is There A Peak Age for Entrepreneurship? I know a few Dallas entrepreneurs who are in their 60s. So don’t be discouraged because …
Investors are lemmings. Some do follow what’s hot and want the hip 20 something. Really, as a founder, why would you chase such shallow money? Many investors, like BAE, evaluate companies irrespective of age. Founder and team experience are a big plus. We see past the hype of concept ventures that are hot air. But if you’re concerned about this …
Accept God. Our God. You must accept the Church of Infinite Rejection as your true savior. You WILL be turned down and receive grief for thousands of reasons on a daily basis from everyone in your life – loved ones, investors, partners, staff, volunteers, service providers. But frankly this is jumping the gun because at this point …
You are not an entrepreneur. Everyone has ideas. It’s the execution that counts. You have barely started. Being an entrepreneur is a long, hard, painful path. If you truly believe in your mission, you do it because you’re driven. It’s in your DNA. You invest the time. You find solutions. You adapt.
Now there are incubators that will provide seed funding on concept. But enrollment is very competitive. Assuming it’s not a fit or you can’t get in …
You survive. You don’t pay yourself or your partners or team members. If you have hard costs, seed capital comes from your savings, credit cards, other personal assets and debts, family, friends, and crowdsourcing.
If you’re just at the idea stage, you have far to go to be ready for an accelerator like BAE, angels, or VCs. You’ve got to refine your business model, find customer pain, acquire partners, demonstrate market need and demand, create value, start a prototype, build your business plan, and show your sweat investment. Try my BlueEntrepreneurs.com Resource Guide for helpful links.
Now young kids often are more successful at getting to this point because they have no obligations. It’s easier for them to make the sacrifice and survive while they build the business. They don’t have to have a full-time job, support others, or make house, car, or insurance payments. They can live at home with mom and dad or with other starving entrepreneurs.
Vince, if you truly believe, just do it. Anyone can at any age.
Good luck!
Marc
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