As a co-founder of a (rapidly growing) startup, I tend to keep tabs on available investment opportunities.
Not so much because we require funding, but because the better I understand the funding process, the better the deal we’ll be able to negotiate when we really require investment.
When going through the website of an angel investment network, I was rather intrigued by the following chart, which purported to describe the “milestones in the life of a startup”
The said angel investment network mentioned that they would only invest in companies in the early stages, i.e. from the “product in development” stage to the “$500k/year revenue” stage.
This made me start thinking – the milestones in the early life of a startup are well known (i.e. concept -> development -> prototype -> product). Yet the milestones afterwards are ill-defined.
While revenue appears to be a good bet at first glance, many companies have been sold for large valuations, despite minimal or no revenue. An excellent example is OpenFeint, which was sold for $104 million, despite a revenue of only $282,500.
And even if one considers revenue, what would the milestones be ? $1M/year, $3M/year, etc appear to be a bit artificial and arbitrary to me.
What are your thoughts ?
