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Written By: Janine Kick


If you’ve talked to any Kerosene team member, I am sure you’ve heard us at one point or another get on our soapbox about ‘running through the tape’ during the fundraising process. That’s because when it comes down to it, the more customers you have, the more revenue you (likely) have, the “easier” it is to convince investors to make an investment. We hear it over and over again from the 200+ investors in our network – they ask, “What does Company X’s current revenue look like?” before they even consider taking a meeting… 

Let’s say you’re one of the special ones and you can answer the above question positively. You’re sitting at about $20k MRR and growing – GREAT. That’s step one. You’ll still need to convince investors that people *will continue to pay* for your startup’s product. How can you create such a convincing story? 

It’s all about building a very clear picture of your future pipeline and demonstrating that your customers are progressing through the funnel towards a purchase. Which, for many of the early-stage B2B startups we engage with, it often looks like quantifying the number of companies in each of the following buckets: 

  • Referenceable Letter of Intent (top of the funnel)

A referenceable LOI is an agreement between a startup and typically a larger organization agreeing to become a customer when the desired product becomes available and meets their expectations and needs. These types of agreements aren’t typically binding, but they are a good proxy for investors. 

  • Pilot or Proof of Concept

Having a pilot in place is one step closer. Your potential customer is implementing your product and validating performance in a “test run” of the technology. Often, a pilot is paid for and serves as the first step of a company wide roll-out. 

  • Signed Contract

You’ve developed the product, tested it and have a signed, binding contract in place for a set number of licenses over a period of time.

  • Contract Revenue (bottom of the funnel)

The holy grail we’re all after, right? At Kerosene we say, ‘it’s not done until the check hits the bank’ and the same goes here when looking at traction. Once you’ve received your first check from a customer it tends to be easier from there. 

While none of this (except for maybe the passionate, paying customers – and a lot of them!) is a silver bullet for fundraising, being able to demonstrate early signs of traction and your pipeline progressing from week to week will likely help in raising VC. 


Kerosene Ventures – Helping Great Founders Raise Capital