How hard is it to get outside investors and Do I need revenue to get outside funding?

Posted by Mohammed Chowdhury on

Very hard, maybe 1 in 400 deals VC looks at will become a closed deal that they invest in.  Most go in the circular file. More than 90% of companies never get any outside investors of any kind.  This does not include bank loans based on assets and cash-flow which is much easier to get because the banks (not investors really, they are lenders) have security and do not take risks like early-stage investors.

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Although revenue is helpful, and opens many more options, it is not required by angel investors. Most VCs require some revenue to know you have a proven “proof of concept” meaning both a product and a market/sales process that can close deals.  This is less true in biotech, pharmaceuticals and medical where product development approvals are far longer and may require FDA approval. 

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These companies can often raise $50M+ without any revenue.  If you are a consumer product, app or website then the registration of customers without revenue can be sufficient, but the numbers required are pretty high, many thousands to have statistical significance in calculating the cost to acquire customers and their potential revenue over a lifetime (LTV).

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