Revenue First: A Mantra for Startups

Ivan is the co-founder of Start Now, a startup helping organizations and businesses grow volunteering by providing volunteer management tools.

Let me put it out there – raising seed funding is easy. If you are not too greedy or choosy, nearly every Singapore government agency has some scheme to seed your first idea. We have MDA for media-related startups, Spring Singapore for new, innovative ideas, and even MCCY with funding for social enterprises that help the community.

Frequent readers of startup related news sites such as SGE, TechinAsia, and the myriad of other sources covering the startup scene in Southeast Asia, will note a bubble brewing in US$250,000 to $500,000 seed rounds. Prior and further to this, many (in Singapore and Malaysia especially) have already gotten a first round of funding from a government agency.

So with all this cash being thrown around, why focus on revenue first? Shouldn’t it always be about market share and all the other fancy valuation terms Silicon Valley invented? I’ve heard many startup founders explain their business strategy as “mindshare” or “let’s worry about that later, we can raise funds anywhere.”

I must beg to differ; vehemently even.

Silicon Valley’s model of making many technology startup founders incredibly wealthy has become surprisingly entrenched. However, I don’t believe that same model applies in Southeast Asia, or even to Asia in general. Here’s why:

1. There is no “next round”

Venture capitalists focused on funding firms in the three to five million dollar round are an extremely rare breed. A Singapore-based VC in that category once remarked to me that “for every 50 seed round funders, there is only one of me”.

So what does this mean for us startups? Well, it means we cannot continue being deluded by Silicon Valley – which I might add, Bravo TV has sunk to new depths – and admit that the situation is actually quite dire.

After blowing over $50,000 on your initial development and another half a million on what’s called market share acquisition, all that’s left is a company without any real tangible value.

But perhaps you are nearly there and just a few more months away from reaching the tipping point. It doesn’t matter because without funding you are next to dead. And your company, worthless.

2. Losing Equity Reduces Motivation

There is the oft-cited saying that all startup founders would have heard at least once, “Would you rather own a slice of a big pie, or own all of a tiny pie?”