When I took over Springleap, we made money from month 1 and that has never changed.

Let's rather start with this:

Revenue vs profits vs Runway. They're all different.

As a startup you figure out your costs for 18 months and that's your runway. That's what you raise. Thereafter, show how you're going to make capital.

Fact is: some startups don't "make" (turn a profit) in the first year. That's why the valuations are significantly lower. It's not the lack of revenue... it the lack of evidence of market fit. It's the data that's missing which makes the investment super risky. Getting market fit, adoption and validation is always best shown in scalable predictable revenue.

So what goes on in this first year?

Assuming you're not dealing with freemium or community models that are "build it, get them through the doors, get the engaged and then figure it out" - you need to figure out the path to revenue, average lifetime value of a customer and cost of acquiring a customer.

First 2-3 months should be MVP. Thereafter a month or 2 of finding the market fit data. Then agile redevelopment based on A/B testing and surveys. By this point you're 6 months in. The next 6 months are all about poking and prodding to find the scalable model. As my VC pal Eliot from Boldstart says: Build, validate, scale.

Investors classical want to get involved in the scale part unless it's your F&F round, where they're betting on the jockey.

We actually got Springleap profitable in month 2 and 3 - I think Lane Becker would agree that serendipity always plays a part, but heck, we worked super hard and were relentless.

We used a variety of techniques. One of the most effective: get clients to pay for us to develop the things they wanted that made sense to dev for the platform. It's a great tactic: go in. Listen to their searing pains, gaping holes and primary goals.

If your product/ service can service these, offer the dev at barebone costs and put a margin on top for the service itself. Show a huge discount and that you're doing something special for them that you were only planning on doing much later.

Nail this technique and you will get:

1. Case Studies
2. Revenue
3. Testimonials
4. Referals
5. Data
6. Product

Hope this helps. Live long, prosper and build stuff people will use. Drop me a call if you want to pick my brain apart on the matter.

Answered 7 years ago

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