Startups are usually shy about discussing their current revenue when they are early in the process as the revenue is not large.

I tell the startup the investor doesn’t care about the size of revenue, but rather revenue predictability. 

Investors look for systems in startups regardless of the size.

Do you have a process for finding customers, introducing them to your product, and then closing?

If you have a sales funnel you are using, it’s helpful to share that with the investors so they see the traction you have in your sales prospecting process.

Use the funnel in multiple investor updates to show how prospects are moving through it.

After a few months, capture the metrics of that flow including the average number of leads turning into sales, and the average time from lead generation to client closing.  

You want to show a system that is up and running albeit with small numbers but emphasizing the predictability of the numbers.

In talking with investors, mention your process with phrases such as, “For every 10 leads, we generate 1 customer worth $5000 in revenue.”  This is the magic investors are looking for – a system with repeatable and predictable outcomes.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.