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Comment by jjeaff | Hacker News Reader

I don't know how data driven it was, but an accelerator I was in a few years ago said that they found that their seed stage startups with early revenue actually had a harder time raising a series A in many cases. Presumably due to the fact that VCs would try to extrapolate future market from that revenue or would wonder why the revenue wasn't higher already.

But if you were "pre-revenue" then they just accepted that you were pre-revenue by choice and everyone's imagination was the limit for future revenues.

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This concept was literally parodied in Silicon Valley: https://www.youtube.com/watch?v=BzAdXyPYKQo

Quite funny too.

Yes, I was quite amused when that came out because we had been told that a few years before that show even aired.

As a founder of an SF tech company that now makes tens of millions of dollars a year, our revenue was never enough (or made fast enough) for the investors we talked to when we were raising our early rounds. Sometimes, if we made $X in 6 months, the VC's "no" was "We would have liked to see you make that in 3 months". It's why I have a tough time watching Silicon Valley -- it's too accurate and painful to watch.

I find it mind blowing that making robots to tap screens is such a lucrative business.

Who's buying all of these up?

The robot business isn't bad... Story for another day. But it's my first startup, the test automation SaaS business that's currently making the big $$. Literally any company with a web site or mobile app needs to test their stuff. It's a huge market.

ROI! Sadly the advice it's closer to reality than you would think.

One of the VCs of my previous startup was part of the original ROI (Radio On the Internet) guys.

This is interesting. While I haven't seen any data to suggest this is a generalizable rule, we certainly do see rounds happen for companies that have no revenue.

However, most of the rounds we've seen do have revenue (ex-"hard tech" which is a whole other thing). Whether or not that revenue is material is another question.

This seems counter intuitive but makes a lot of sense. If a VC firm thinks they can help a company learn how to drive revenue, then it is easy to make invalid assumptions based on past success. However if you have 5 years of data without revenue growth, they will assume you already did the right things (unlikely) and there is no real market.

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