Fundraise with no revenue?
Rick Somar
15 replies
Is it possible to raise a pre-seed fund without any traction?
Tell me about your experiences.
Replies
Rupin Mathur@rupin_mathur
I believe that the market is maturing and in most niches and technologies you need traction on your platform and clear roadmap to profitability. But in certain new age technologies like AI you can raise capital based on your knowledge experience and Idea.
The Crypto Industry was also like this in the past years, but with the recent collapse of the market, Investors have learned from their mistakes and are focusing more on traction and potential to become profitable.
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@rupin_mathur Yeap! Hype-trending markets are the best option to do it for sure. They're still learning about the game so it's easier to learn and adapt quickly.
Definitely possible ✔️. Usually for pre-seed, investors are investing into YOU and your team. Sure, it matters if you are tackling a validated problem space and have a good idea of how to create value, but are you the right people to bring the idea to fruition and capture the market? :)
@henriquechappuis Happy to connect! In full transparency, I haven't founded a company myself. I'm just lucky to have had opportunities to work closely with founders.
In my past role, I worked very closely with our solo founder to build up our strategy, GTM, and accelerate our fundraising efforts (e.g. creating assets, participating in calls). We were in construction tech, so there's some nuances to fundraising in this context vs others.
In 2021, I moved to Berlin and later joined Collato, which is also a seed-stage startup, as their first Product Manager. As you can imagine, these days I'm much more removed from fundraising. But, our story is super interesting because we secured significant funding (pre-seed and seed round) from the get-go despite making several pivots along the way.
(if you're interested, here's the press release from 2021: https://collato.com/blog/launch-...)
Connect with me on LinkedIn (https://www.linkedin.com/in/grac...), and we can sort a time from there :)
Fundraising without revenue can be challenging, but not impossible. It's important to have a solid business plan, a clear growth strategy, and demonstrate the value of your product or service. Building a network of investors and advisors can also be helpful. However, success is not guaranteed and fundraising is a complex process.
I agree with the previous commenters. It is interesting that there are several AI companies that have over a $1B valuation without a revenue stream.
@ian_williams4 yeah, that's crazy but I'm sure they at least have some track record such as an A+ team on the board.
What do you think @sven_radavics
Sometimes it's easier to fundraise pre-revenue that it is to raise post revenue. Pre-revenue, the opportunity is what you say it is...and it comes down to whether or not they buy into your vision.
Once you have revenue, if it's not growing fast enough, you have a problem. Rarely will vision and a got story get you past the revenue numbers if they're not up and to the right.
It's a different type of investor though - so investor targeting is key.
Thanks @maxwellcdavis
@maxwellcdavis Thanks for sharing your thoughts! I have the same feeling but it's hard to find angels who can match your mission without any revenue or track record to show.
Have you raised money before traction? I'd love to learn more about the process.
Researched that intensively over the last 2-3 months.
Currently, the environment is rather challenging. It really needs to be a hot topic that generates fomo for investors (generative AI definitely being one here).
You need to show domain know-how of course.
Furthermore, I would ask myself if I really need the money at that stage. Fundraising needs a lot of your capacity; at pre-seed, you will get diluted by a lot.
@matthias_strafinger Everyone says it is a full-time job and I kinda agree with that. I'm on this path right now and it's really exhausting.
The research part is the most time killer for sure.