“Pre-Revenue” Is Not Always A Curse Word

By Eric Furlow

By Eric Furlow: https://www.linkedin.com/in/ericfurlow

I am approached many times each month by owners of pre- revenue startups. To be honest, I am no different than other M&A professionals in that my first thought is ... bummer ... because of course we would rather hear, “I want to sell my $20 million in annual revenue company, will you help?” However, my 20+ years in M&A in the Internet service sector has taught me not to immediately read this project its’ last rights, rather inquire about a few quick basics which can turn my perception of the potential sell side assignment around.

• If the pre-revenue SaaS is focused in one of the latest cutting- edge industries, then it’s a plus.

• If the pre-revenue SaaS is owned and managed by someone or a group of people with a successful track record of building then selling SaaS projects, then it’s a plus.

• If the pre-revenue SasS developed all or most of the IP in- house, then it’s a plus.

• If the owners want to keep a portion of the equity and stay on board ... and are actually honest about this, then it’s a plus.

We have all heard of pre-revenue startups, mostly SaaS, being sold for large sums of money. In most cases they checked the aforementioned boxes.

In reality, most who approach me just check the last 2 boxes, which by themselves are rarely good enough.

Hope you enjoyed this article !

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Sebastian Amieva

Investor / M&A Expert / Mentor

www.sebastianamieva.com

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