How VC’s Get to “Yes” (opens in new tab)

This is a Sales truism too. It's much easier to convince people who believe than people whose job it is to say "No". Early stage funding requires shared optimism between the funder and funded.

100k MRR does not mean that much if you've got staff costs. Let's break down super simple costs:

Office - 5-10k/mo Employees - 10k/mo ea Servers - 5k/mo Legal/accounting/etc - 5k/mo Misc - 10k/mo

All of a sudden with 10 employees you're losing 20-30k/mo. Want to hire 5 new amazing engineers? Now you're losing 80+k/mo.

100k mrr is great if it is you by yourself or a tiny team, but to scale you need a lot more.

For a whole bunch of reasons, ie to pick a few:

- you may have a NWC situation where cash isn't paid up front - you may want to continue to invest in R&D / tech development on newer projects that aren't currently generating revenue - you may simply want to grow faster / hire more than your current financials can support

It seems pretty logical to me - at that point, you probably have a solid stepping stone, and want to decide what to do next.

First two reasons I can think of.

Imagine you're doing that on an expensive cloud hosting setup and your expenses are really high. An infusion of capital could allow you the opportunity to build out your own server infrastructure(or pay annually on the cloud infrastructure) and dramatically lower your expenses and push your margins up a lot.

It would also offer you the flexibility in your funnel to offer back loaded deals to get larger clients onboard.

Building a large sales team to go to market is initially expensive or your burn rate relative to the capital in the bank is growing despite your profitability (you may not want to risk your limited run way if the economy goes bad).

You might want capital, but perhaps a cheaper form of capital than VC?

Because revenue != profits.

Because you want 10m MRR?