Sometimes a Startup Needs to Stop Making Money
VCs don’t always need to see crazy revenue growth before investing
“Don’t worry about making money right now” is not the advice you’d expect a seed VC to give a CEO right after writing them a big check.
Do I not desire the up-and-to-the-right chart curve needed to raise a Series A and get me that sweet, sweet write-up? Doesn’t my venture capital fund Homebrew want steak instead of just sizzle in the companies we back?
I’m long-term greedy, which means ultimately my venture success is going to depend on the quality of company exiting — not pump and dumps or millions in fees. Phosphorous burns white-hot but not very long. Unsustainable revenue curves willed into existence in order to prove growth ahead of raising more capital is the organizational version of phosphorous.
Instead, I want furnaces — sustainable heat sources that go as long as you feed them. (Well, technically, I want furnaces that eventually stop burning wood and start spitting out wood, but whatever, it’s a metaphor.)
Phosphorous burns white-hot but not very long.
There’s an increased belief (maybe reality for some) that seed VCs want to see revenue before investing in verticals like SaaS…
