MRR Is The New MVP…Start Ups Need $$$…before they can ask for it

The market for fundraising has been made more difficult every quarter for the past few years. There are a lot of people that claim there is less capital being invested but the Data (I am a Data Geek) shows that this is not true. Tons of money is going out. It is going to companies that have MRR 97.2%+ (made up stat) of the time. What it is true is to get investment you need to have REVENUES! MRR is the new acronym every Early Stage Seed Investor (another funny term) is asking about. Well…if I had revenues why do I need Early Stage Seed Capital? *Scratching my head*

If you have Monthly Recurring Revenue (MRR) then everyone is ready to throw money at you. At the same time, WHEN I get to MRR why do I want you to take a huge chunk of my company? Oh yeah, because you can help me SCALE? You can get me from $1M MRR to $15M MRR and then I become the cat’s meow and we all get rich. That delta between $0 MRR and a $15–40K monthly burn rate to build POC (Proof Of Concept) MVP (Minimum Viable Product) is SO big in today’s entire eco-system of investors. My company has AngelList members that have no start up experience asking for MRR as a next step when we showcased a great working MVP + 12 major clients engaged and ready to pay to play. Getting to the Pay to Play or MRR will determine if we live or if we die. As an entrepreneur there is no other story to 99% of the VC’s and Angels today. If you can’t speak to MRR then you are just a napkin idea from circa day 1996. There is no other relevant measure but MRR to every investor that is not a friend of 10+ years or family member. If you find one that does not ask or require for MRR than you have found a Leprechaun and you best keep them close and thank them for not being so bent on the Racing Forms that determine which horses every investor bets on. The point is, “NO ONE BETS ON MAIDEN HORSES!” No matter what the bloodlines and workouts seem to be. You have to go to the track, saddle up and WIN a few purses. Not big ones but win some. Everyone wants to believe their horse is going to get to the Kentucky Derby and no one is investing in horses that have not at least won some purses. MRR.

Why? Because there are so many good ideas out there and so many ways for small companies to make small amounts that limit risks to these investors. They hold all the power right now. There are tons of investors out there but they have too many “deals” to look at so when they see anything that is not with MRR then they just fall out of interest. I don’t blame them really but it is hard for us EARLY SEED STAGE companies to understand. As a Seed investment, we need water, otherwise known as cash, to get to crop, otherwise known as MRR. The issue is those things don’t measure as equal anymore. It makes our lives difficult to move forward in. Engineers want to see the cash machine too…everyone is focused on MRR and if you think MVP allows you to pitch you better take a look around at who is REALLY getting funded and why. Listen to the questions being given by the VC’s and Angels. They want to know where the cash is…today…not projected.

We are a Big Data SaaS company at 451 Degrees. We are trying to showcase the values inside Big Data as they relate to Search Engine Technology and Ad Tech. I share this to give insight to my perspective and pains. We are dealing with shifting a marketplace that everyone believes is owned by one giant called, Google, that no one believes can be moved or shifted off of their throne. We disagree but try to prove that without revenues and every investor says…”Interesting technology and valid approach. Comments and Big Data from all social beacons matter. I can see that. Interesting that no one is using it this way. It makes sense. The IP is nice but show us the MRR…”

Before we can showcase how we change Search we need to get traction with Revenues (MRR) and thus need to get our Ad Tech in place. We also find it funny when we try to define Google as a Ad Tech company and VC’s and others refuse to accepts it as truth. Uhh…Google makes 97% of their revenues through their Ad Tech properties. ANYWAY….

With Ad Tech, we need to prove this to Publishers and to Ad Delivery networks that do not want to invest in change. However, that is changing. As recently as 24 months ago every Ad Tech company was asking us to “just show us how much traffic you bring…” When we said we bring “better relevancy and thus better returns and higher revenues…” They yawned. They did not want to build anything dynamic. Now they are calling us to ask how we can better create Key Words for relevancy and fight Ad Blocking and Privacy issues. We have answers but we need more capital to build stable API’s. Hence our problem…it takes money to build these pieces and maintain their stability. We built an Artificial Intelligence, Machined Learning, Natural Language Processing, Root Word Linguistics SaaS that can rival anything out there but that does matter at all unless we can show the cash machine every day is being hit. MRR. We need to build the lines that bring the money into this monster machine but if you do not have MRR then the rest of your machine is “just broke” literally and figuratively. Today, EVERY Entrepreneur needs to bring in MRR. Our MVP is just a ‘nice to have’ and expected. If you cannot showcase to them the final 10 yards to Touchdown then no one is going to help you get across the goal line. MRR = Funding. So can we just get rid of this Early Stage SEED Funding definition? It is so DAMNED STUPID and insulting to the Entrepreneurs…