I took 11 active seed and early stage funds (Accel, Blume Ventures,Venture East, India Innovation Fund, Ojas, Seed Fund, India Internet Fund, Nexus, Helion and IUVP/Kalaari) and 4 top angel networks (Mumbai Angels, Indian Angel Network, HBS angels and Hyderabad Angels) in India to understand their pattern of investing in pre-revenue startups.
Of the VC funds, the norm is about 10% of their portfolio over the last 2 years (typically 3-6 companies) that were funded were pre-revenue.There are exceptions such as Seed Fund (30%-40% pre-revenue, because of their incubator Seed Farm, Nexus (over 50% pre-revenue fundings) but they are truly exceptions and India Internet Fund (very few investments so their % are skewed to 40% and they incubate companies).
Pre-revenue companies getting funded by VC’s in India is the exception not the norm.
Of the angel networks, only MA and IAN funded more than 10 companies over the last 2 years. Both funded less than 3 companies each year that were pre-revenue.
Pre-revenue companies getting funded by angel networks in India is also the exception not the norm.
Then I took the 10 active seed and early stage funds in US (First Round, Khosla, KPCB, Sequoia, Accel, Benchmark, Emergence, Google Ventures, Founders fund, Union Square) and the 4 most active angel networks (Band of Angels, Investors Circle, Golden Seeds and Alliance of Angels).
Of the VC funds, the norm is about 20% of their portfolio over the last 2 years (typically 6-10 companies) that were funded were pre-revenue. Higher than their Indian counterparts but still an exception not the norm.
Pre-revenue companies getting funded by VC’s in Silicon Valley is also the exception not the norm.
Of the angel networks, Band of angels is the exception at nearly 30% pre-revenue. Others are higher than India, but at the 15-20% mark.
Pre-revenue companies getting funded by angel networks in Silicon Valley is not high, but better than India.
I had a chance to talk to at least 1 investor in a phone conversation from each company above, so these are not just website observations.
So who’s funding pre-revenue companies in India and US.
Accelerators and Seed-funds such as YC, Tech Starts, 500 startups.
So if you are pre-revenue, dont waste your time going to angel networks or VC’s. Spend time building your product.