"How Am I Supposed to Fundraise When I'm Not at $1M ARR?"

Hey everyone, this is Ryan from Breakout Capital Group.

It’s not a secret that revenue / growth is the holy grail for most early & growth stage fundraises.

But that doesn’t mean you can’t raise if your revenue isn’t impressive.

Here is a breakdown of all of the other areas of your company you can win investors over with, to secure capital in your raise:

1. Experienced Team

Regardless of your revenue numbers or not, having a killer team might be the single highest leverage aspect of a deal that investors underwrite.

Investors are looking for mitigated risks.

“How can I make a calculated bet on something that could be a home run, while making sure I strike out as little as possible”.

The best place to start for this line of thinking is to back someone who has done it before.

Whether you were a previous founder, exited a business, have heavy domain expertise, or something similar, there is always a different lens placed on teams that can prove they have this background compared to someone starting for the first time

2. Technology IP

This is a murky subject these days.

“IP” in it’s general sense doesn’t really hold the same value as well as it used to.

This is due to AI advancement and how easy it is to spin up new ideas, products, and software at rapid speed.

Nonetheless, investors are still making bets on technology well before the revenue catches up all the time.

• 1. Safe Superintelligence (SSI) - $3B raised, $32B valuation, zero product

  • Founder was Chief Scientist @ OpenAI (tying back into our team experience)

• 2. Xaira Therapeutics - $1B Series A, day one

  • no product, no revenue, no clinical data. Investors were betting purely on the thesis that AI-native drug discovery would compress timelines and unlock a generational opportunity in biotech

These are obviously outlier examples, but conviction is still being made in technology all the time.

3. Market Exposure / Timing

The most obvious example of this that we’re seeing recently is in AI.

Venture has slowed down from the insane 2022 run where it felt like everyone and their cousin were getting capital left and right.

But the opportunity right now is still enormous.

When new opportunities and technology advancements like AI come about in a market, a lot of your potential success in fundraising can come down to timing and being in the right place at the right time.

• A VC with a legal background wants exposure to legal AI tech because they think it’s going to disrupt the field and how firms manage intake forms

• A family fund in media / sports technology wants exposure to companies building in consumer / fan experience products because of the digitization of entertainment venues

There are multiple ways to win the fundraising game.

Look at your strengths and the unique qualities that you and your company hold.

With what I mentioned above, just know that you can win over investors with metrics outside of just impressive revenue.

Hope this helpful for some of you who are currently raising.

Have a great day,

Ryan Bryden
Breakout Capital Group

If you’re raising $2-50M and are looking for help connecting to investors and getting your round closed in the next 90-120 days, reply back to this email to see if we’re a fit to help.