Are Competitive Investments Really an Issue?
May 14, 2024
Today, we’re talking about competitive investments. Should founders be worried about them?
Today, we’re talking about why startup investors care more about growth than revenue.
Founders often ask me for a baseline revenue number they should hit in order to raise a Seed round or Series A, in reality there’s no universal revenue targets, investors instead want to see exciting growth.
I regularly meet founders with $1–3M ARR, who are struggling to raise because their growth is slow or erratic. Investors want to see repeatable patterns in your revenue growth.
It will be much easier for a startup at $250k ARR and 10%/month growth to raise money, vs a company with $1M ARR and flat growth. Why? The lower revenue company will overtake the higher revenue company in just 1 year, based on the current trajectory.
So although it may seem counterintuitive for VCs to get more excited about growth vs revenue, there’s a good reason.
Best of luck out there.