The Promises of Pre-Revenue Startups

Pre-revenue startups are in a class of their own. They are able to make outlandish assertions and get away with them since they are not beholden to data.

Pre-revenue startups are able to model customer acquisition with the most “conservative” estimates that they can dream up. Other assertions and assumptions are made. For instance, pre-revenue healthcare startups assume they’ll achieve FDA approval, when in reality that is a risky endeavor. They pass off these promises to everyone as their facts on how things will transpire.

When the rubber meets the road, projections get blown to smithereens. I believe that happens to every pre-revenue startup. Once data starts coming in, even if you’re on track to become successful, your startup will never look as good as it did pre-revenue.

My advice is to start making money. Focus on building real value. Forego the temptation to avoid the real world. The pre-revenue fantasy land is fun and briefly useful, but should never be an escape from the fact that your startup has a tough row to hoe to acquire paying customers.

What are your thoughts on pre-revenue startups?

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