Generating change by focussing on revenue instead of the next funding round
As we have mentioned before, one of the beliefs in our investment thesis is:
“The time of the unicorn is over. We need revenue-driven and problem-solving startups.”
Why is this such an important part of our thesis? The system as it is right now, we feel, is broken. VC’s are steering startups towards higher valuations and eventually exits or IPO’s in order to make their intended ROI’s within the time set for this (usually 8 to 12 years). This means that a lot of startups are either busy raising money, or looking for exits rather than what we think that they should be focussing on; proving their vision and building a profitable business.
We want to help entrepreneurs in proving their vision and building a working business model. We want them to focus on what customers need and how to create real value. We want them to follow their vision and proof they can build a real business out of it. Success can also be real revenue and a healthy company.
We feel that this should also be reflected in the way we run our fund. Right now we are looking at Indie.vc, an US-based fund that is experimenting with ways to invest in startups that want to become profitable businesses.
“One that values building a sustainable and profitable business over working towards the next fundable milestone.”
They are, like us, working with convertible loans that convert to equity whenever there is a follow up investment. But that loan can also be payed back (times 5) with the profit you start making once you become a company with revenue. Thus creating more value for both the company and the economy. Or as they say;
“We think that independent businesses like these not only create more value for society, but also more long term value for investors.“
This is something we strongly believe in as well. For both investors and startup entrepreneurs we are looking for people that belief in this as well, so we can make an impact together.