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.