Business Model Down Round Revenue 
VC Cafe
FEBRUARY 27, 2024
A founder asked me what makes a $2M round “pre-seed”? especially if the startup already has a product and revenue? And why do we still sometimes hear about pre-seed rounds that look more like a series A in pricing and size? We’d like to see that the relevant functions are covered (who’s writing code?
Both Sides of the Table
JUNE 22, 2011
Ah, but today’s Internet companies have real revenue! New investors hate down rounds. Those with strong business models suddenly stand out when the tide goes out. I said that at the Founder Showcase, too. and profits! Sure, that makes them better companies than those of 12 years ago. That’s a fact.
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ReadWriteStart
JUNE 1, 2020
Funding might be a need in some cases — but it’s not an absolute necessity. ? The business should be self-sustainable. The primary source of your funds should be your paying customers, i.e., your business should generate enough revenues and profits to fund the growth and expansion. Incubators and Accelerators.
Lightspeed Venture Partners
OCTOBER 7, 2012
The two founders invested $40k in the business, and plan to license it rather than manufacture it because manufacturing seems too hard. They won a design award at a trade show, but have no revenue and no orders. Kevin questioned the use case since bowls are ubiquitous. The company still had $2M in inventory on the books.
Steve Blank
APRIL 26, 2022
For the common shareholders (employees, advisors, and previous investors), a cram down is a big middle finger, as it comes with reverse split – meaning your common shares are now worth 1/10th, 1/100th or even 1/1000th of their previous value. (A A cram down is different than a down round. Why do VCs Do This?
Scalable Startup
JANUARY 27, 2011
And by growth I mean revenue growth. Flat to negative revenue growth is a real red flag, especially for early stage companies. If you’re venture funded, things get kind of ugly -unhappy board members, cut off from communications, down- rounds to keep you going, or no more funding. And protection form death.
View from Seed
FEBRUARY 19, 2015
Rob,” he said, “no offense, but you aren’t going to get a world class, been-there-done-that CEO into a company with less than $1 million in revenue. Think more about business models. I’ve seen many companies with great products die because a great product is not necessarily a great business. Keep at it. Be pragmatic.
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