I had the crazy/novel idea of trying to explain the connection between the initial revenue from the pilot customers of a deeptech startup and the ultimate value of that venture on a stock-market years later. The good people of the fantastic HighTechXL incubator in The Netherlands gave me the opportunity to bore their startups with this and there are links below to various parts of the resultant presentation.
I’d love feedback on this, especially from financial analyst types, because it is an idea I’d like to develop. I’m trying to get across the idea that real customer revenue is entirely the basis for valuable ventures – from the very beginning – even if you think that your ground-breaking tech needs another gazillion of investment before you should talk to a first customer.
00:00 Start of talk and intro to Deeptech Seed Fund. We invest in science based ventures if and when there is evidence that some early-adopters are willing to commit funds to the venture and if later-stage specialist investors tell us that they will be interested in the later funding rounds.
05:26 Beginning of the presentation
06:35 Relationship between revenue and market capitalization of a company – for listed companies and for early-stage startups. Without revenue from real customers the whole proposition could be BS and represents an unreasonable risk for private sector non-specialist funders. Sometimes it is possible to get initial investment funding without revenue but unless you begin selling very soon everything falls apart. In this section of the talk the link is made between, on the one hand the revenue of later stage companies and their stock-market value and on the other hand the valuation of early-stage small-revenue companies.
13:23 Why startups need revenue from the very beginning. Why revenue is a reality-check on everything and how getting early revenue for ventures that are based on great science is easier than most inventors think.
26:26 Questions and Answers
Pearse Coyle pc@deeptechseedfund.com deeptechseedfund.com
This post was originally posted on LinkedIn by Pearse Coyle. You can view the original post here and follow Pearse on LinkedIn here