I’m pre-revenue. How do I get funded?
101 of getting cash to make your runaway longer
Someone should buy a domain name “pre-revenue.com”, get tons of traffic and make money on Google ads
— someone on Twitter
- How do I fund my pre-revenue startup?
- What are my chances to fundraise if we’re don’t have paying customers?
- What’s the best way to get funded if we’re on a product development stage?
That’s how my personal Quora page looks like — almost 80% daily question flow consists of requests that deal with fundraising on pre-revenue or/and pre-launch stage. Unfortunately, there is no one-size-fits-all answer to these questions. The short and the good piece of news is: there are ways to get more cash for your runaway. Here’s how.
*I’m not discussing there the obvious option to bootstrap, taking personal loans, or convincing your friends and family to invest. You know it all without my “captain obvious advice”.
It’s a pretty popular option, especially if you’re a US-based startup. There’re tons of platforms where you can run your crowdfunding campaign. Unfortunately, all of them are not all roses.
Here’s a shortlist of the most popular ones with the description of the flipsides.
- Kickstarter — works best with physical products where you can offer a free product as a reward. Textbook success — Coolest Cooler ( with blender, Bluetooth speaker, etc. — raised $13M). Flipside: For US, Canada, UK only
- Indiegogo — the same, better to have smth tangible. Flipside: Not for companies outside the USA, Canada, UK, and Australia
- Croudsupply — same story
- Experiment — crowdfunding for scientific research. If you research ants or split molecules — this option is for you. Flipside: Not for companies outside the USA, Canada, UK, and Australia
- Chuffed — platform for social businesses (ex, if you’re building an app for cat shelters). You can run campaigns being a resident of one of 32 countries (check the list).
- Fundable — SaaS and other software project find their space here. For US-based companies only.
- Wefunder — great choice if you want to start a venture fund and make a shoutout to everyone you know to become an LP. For startups Wefunder doesn’t offer any leads — they only provide an infrastructure where you bring your own investors and angels. For US-based only
There are many other options too — here’s a link to the full list. But you get the idea: you will make the best out of crowdfunding if you’re building a physical product, or social service, or something scientific and located in the US. If you’re nothing of those — scratch out crowdfunding.
Grants and governmental financing
This option is actually much more accessible for the majority of startups. Why? Because there are government grants in almost every country. Google is your best friend in this research. For example, there’s a database of government-run programs for India. You’ll find grants for startups in specific industries ( dairy processing, solar energy startups, etc) .
There could be also location-based entrepreneurship development programs like this one. Just Google up your city + entrepreneurship.
The upside of every grant — you don’t have to give it back! 🎉 The flipside — tons of paperwork for getting it, and to follow up.
Another and a less stressful option is available. A couple of years ago big corporations started supporting startups. However, once again, the options are mostly for the US-based companies. If you’re building something that might find application in retail or FMCG — there are big corporate programs in Macy’s , Target, and Unilever (this one os is multinational).
They are always a good option if you manage to get inside. Some access invest in their alumnae (from $25K to $100K in exchange for 5–10% of equity). Others introduce to investors at the Demo day. The problem with the accels is the same: they are county-specific (with very few exceptions like YCombinator that invests now globally, but you have to be really, really good to get in there).
The fest resource to search for accels is F6S. You can filter by location, industry type, stage type. Friendly advice: don’t sign up for the program until you look up reviews on social media. I’ve seen many scams that presented themselves as accelerators. Their only goal was to get their hands on founders’ very scarce financial resources.
There are several good industry-specific ones that work in several countries. For instance, plenty of accelerators are run by Google — chose the ones that are for pre-seed (the one even for indie-devs).
Small but great:
https://nma.vc — for startups in media
Traditional VC and Angels
Well, this one is tough. On one hand, there’s plenty of cash on the market, more and more people would love to become angel investors. On the other hand, startups are also numerous. especially, the ones on the pre-revenue stage.
Again, when someone decides to invest for the first time, they prefer less risky deals (with at least seed-stage startups). As a result, pre-revenue founders are left with even fewer options than it was 10 years ago. This trend is especially visible in Europe.
As Nicole Velho (runs Sie Ventures, a platform to help female founders secure funding) points out:
— Europe is maturing, both at the founder and investor side. But, it’s the later stages that are really growing, whereas the pre-seed stage seems to be shrinking or lagging behind. The big problem at pre-seed is that there’s no established infrastructure in terms of risk assessment and even fundraising. It can be really difficult to collect all the angel cheques that are needed together. When you’re raising half a million, it’s really difficult to collect $10K cheques and it takes a lot of time because you’re going to have hundreds of conversations before you close a round.
Result: investors don’t go there where there’s no infrastructure.
However, there are few exceptions to this rule.
- Cleo Capital — a new fund that invests in startups on the pre-revenue stage, also in immigrant-founded startups. For the US founders only
- January Ventures also claims that pre-revenue startups are welcome. Industry agnostic, but again, only or the US.
- Great fund to contact if you’re at least on the MVP stage — a Calm Fund. They provide strong and tangible support for bootstrapped founders and don’t try to push your growth as most other VCs do.
- Hustle Fund supports pre-revenue startups with checks starting from $25K. They operate not only in the US but also in the UK and Southeast Asia.
— We invest pre-revenue, but I look at the timeline. If you’re 2 weeks into the project and pre-revenue, it’s fine. If you’re 6 months into and still pre-revenue I start wondering what your priorities are —
says Elizabeth Yin from Hustle fund (you can DM her on Twitter @dunkhippo33)
- Amazing new initiative — Product Hunt fund Hyper. They have begun to invest $300K in several companies four times a year. Can be pre-revenue, pre-launch, whatever. You don’t even have to launch on Product Hunt — just apply if you’re building something that you believe will change the world.
Still, I’d say your best bet with angels on the pre-revenue stage — go on Twitter and LinkedIn, do a search and try to establish contact with an investor.
More chances to get funded is to reach out to someone who’s been a founder themselves and now wants to support the peer crowd. Like Ali Rohde @rohdeali — if you go to his Twitter profile you’ll see that he’s open about investing from 100K to 400K in pre-revenue startups.
What if nothing works
It may sound harsh but there’s an option when you’ve tried everything and nothing works. You can’t secure investment, and you can’t bootstrap your company any longer. What can you do to at least get part of what you’ve invested back? You might consider selling. There are 2 active platforms for selling startups at the moment —
You can contact the team responsible for selling and get an estimate of what your startup might cost.
And of course, there’s always an option to pivot and ship something fast. Rethink your product, make it easier, repurpose for another audience. A recent example: ReForm.
Several years ago Peter Suhm, a Danish entrepreneur, founded Branch — a CI/CD tool built specifically for WordPress. The response was great — not without some help from the WP community where Peter had embedded himself long ago, due to his previous project WP Pusher.
But as time went on, Peter realized that he couldn’t build a system that would comfortably hold several hundred users and not exhaust his resources. He needed customer support specialists, a marketing team, an onboarding team, bookkeeping…It was a struggle on both ends: supporting existing customers and customer acquisition. And the cash was burning very fast.
Paul Graham says:
— You build something, make it available, and if you’ve made a better mousetrap, people beat a path to your door as promised. Or they don’t, in which case the market must not exist.
One day Peter realized: Branch was not destined to be scaled, as the growth had too many flip sides. At the beginning of March 2021, Peter put a plug on the organic growth of Branch.
But only to start a new project several weeks later! ReForm — a new project that was built using codes from Branch — was ready to ship in 4 months. With over 1K users on the waiting list and 40 paying customers (even before the launch)! How did Peter do it?
✅ Joined #BuildInPublic movement — all this time Peter was discussing his progress on Out of beta podcast, publishing on Twitter, and hosting a Reform vlog (video series with Q&A sessions, walkthrough Figma mockups for Reform, and many more useful insights)
✅ Adopted Ship fast mindset — it took less than 5 months to build the whole product.
✅ Prioritized hard — Reform team collects user requests but tries to keep an 80/20 mindset deciding each time if this feature is absolutely necessary, or the launch can be done without it. They try to stick to the project’s roadmap where all features are tagged (must-have, bugs, “delightful features” etc.).
By the time the project was launched Peter’s runaway was almost over but he managed to get over 3 dozen paying customers on the very first day of launch.
The main takeaway: if you can’t get funding for your startup it might be a reason to rethink your product, not the funding channels.