Startups Need Revenue (More than Ever Before)
Your idea won’t float you very long. You need actual cash coming in the door, from actual customers. Start early, and get a deal coach as soon as you have real customers.
In the current investment climate, venture capitalists are increasingly prioritizing not just innovative ideas but also clear, demonstrable paths to profitability. As a startup founder, it’s crucial to understand this shift and adapt to meet these evolving expectations.
The Shift in VC Priorities
Gone are the days when growth at any cost was the golden standard. Today, VCs are looking more critically at the bottom line. We are seeing revenue expectations move higher faster. Now even, some angel and pre-seed investors won’t invest pre-revenue.
This doesn't mean innovation isn't valued, but there's a stronger emphasis on how quickly a startup can generate revenue and sustain profitability. The reason is simple: economic uncertainties and market dynamics have pushed investors to seek businesses that can prove financial viability sooner rather than later.
And, the better news is that the sooner you are revenue positive, you are default-alive. Once you hit break-even, you are no longer desperate for funding. You can stay alive and grow sustainability without the VCs, and of course, the best way to get funding is … not to need it!
Demonstrate Commitment to Revenue
For startup founders, all of this means that showing a clear strategy for revenue generation is more important than ever. And, it’s important sooner than ever. You’ve got to get SOME revenue as soon as possible.
Even light revenue is an early sign of traction and product-market-fit. Start selling something.
Launch a beta version at a discount.
Sell a few pilots.
Sell a custom solution you haven’t built yet. Charge half up front, and agree on success markers that will pay out the remaining parts. Perhaps 25% for a B product and 25% for an A product.
Start with consulting. If you have expertise, and you know the problem you are trying to solve, you don’t have to wait to build the solution. Find customers with clear pain points and work with them to start solving the problem. You can build your platform or product along the way.
All of this helps you …
Understand what your customers need and are willing to pay for.
Fail fast with products or services that are close but not quite right.
Get lots of reps with the pitching and selling process. (This will hone your thinking, your communication skills, and your actual product!)
Refine, tweak, reboot, try again.
Get some actual money coming in the door and extend your runway.
Gather testimonials of satisfied customers.
Demonstrate traction for investors and other customers.
Once you have a real product and a few real customers, then it’s time to start cranking that sales machine. You need a repeatable and predictable process for how you get leads, land proposals, and close deals. Quickly, you need to start closing big, move-the-needle deals.
The Role of a B2B Deal Coach
Here's where engaging a deal coach becomes a strategic move. Deal coaches specialize in refining your sales process, enhancing your deal-closure rates, and ultimately boosting your revenue. This isn’t just about improving sales figures; it’s about demonstrating to current and potential investors that your company takes its revenue potential seriously.
Selling to businesses is far more complex than selling to consumers. A B2B deal coach works with your sales teams to:
Have conversations that matter, mapping solutions to desired business outcomes.
Craft irresistible proposals that not only appeal to technical decision-makers but also address executive imperatives. (Remember: executives basically only care about three things–money, mission, and risk. In some ways, the second two roll up to the first one, whether we like it or not.)
Align stakeholders to appease gatekeepers and avoid surprises.
Anticipate and manage potential roadblocks, ensuring that your sales cycle is as efficient as possible.
Manage the impact of change while disrupting the status quo.
By incorporating a B2B deal coach into your growth strategy, you signal to the VC community that you are committed to sustainable growth and are taking proactive steps to ensure your company's profitability. Also, you’ll close more of those deals that build your credibility in the marketplace and help you level up toward sustainability. This can be a critical differentiator in a competitive funding environment. (Reach out to connect with our expert deal coach.)
Conclusion
As VCs tighten their belts and focus more on profitability, startup founders must adapt. Engaging a B2B deal coach is a clear, actionable strategy that can help convince investors of your commitment to not just growing, but growing wisely and profitably. Remember, in today's market, demonstrating financial prudence and a solid revenue-generating strategy could very well be your ticket to securing the next round of investment or landing the customers that push you into the black.