What investors look for before revenue
When there’s no revenue to prove demand, investors look for other signals that your idea is worth backing. These signals can include:
- Letters of intent from future customers showing willingness to trial or buy once the product is ready.
- Engagement metrics such as sign-ups, beta testers, or community growth that evidence early demand.
- Retention signals like repeat engagement or strong feedback explaining why potential customers want to buy the product (when it is available) from a pilot group.
- Customer feedback that demonstrates you’ve tested the problem and solution with your target market.
The key is to show evidence of traction in ways that feel tangible, even if money hasn’t yet changed hands.
Is there a UK bias against pre-revenue startups?
One founder raised the question of whether UK investors are more conservative than their US counterparts, with a bias towards companies already showing revenue. The consensus was mixed.
Some angels in the UK do prefer to see early revenue before committing, but others, particularly those investing under the SEIS and EIS tax relief schemes are comfortable backing pre-revenue businesses if the proposition is strong. These schemes are specifically designed to de-risk early-stage investing, making it easier for angels to support ambitious founders before revenue arrives.
In contrast, US investors are often more comfortable funding a bold vision pre-revenue, but they typically expect much faster growth once capital is deployed. Overseas investors may also want you to launch your service in their country = or even to move the business to their country.
Strategic investors as partners
Another option discussed was strategic investors, customers or corporates who invest because your solution complements their business. This can be powerful for pre-revenue startups, as the investor brings not just capital but also credibility, distribution, or early adoption.
However, founders cautioned that strategic investment can also skew your roadmap if the partner’s interests dominate. The advice: take corporate money only when your objectives are aligned and the partnership accelerates your growth, not theirs alone.
De-risking the investment
At the pre-revenue stage, the founder’s job is to make the opportunity feel less risky. Common ways to de-risk include:
- Leveraging SEIS/EIS so investors benefit from upfront tax relief.
- Building a strong advisory board with credible names who validate the market opportunity.
- Securing grants (as discussed in another session) to co-fund early development without diluting equity.
- Pilots and collaborations with universities, NHS bodies, or corporates that provide third-party validation.
iInvestors need to see that you’re not just selling an idea—you’re reducing their risk with every step. The closer you are to revenue the more likely and investor will be interested.
Balancing optimism with realism
Founders often struggle with how optimistic or cautious to be when pitching pre-revenue. Investors expect ambition, but they also want to see realism in the numbers.
As one participant noted, “optimism creates excitement, but realism builds trust.” That means being clear on the size of the opportunity, while also showing you understand costs, timelines, and the hard work required to reach revenue.
Founder insights from the discussion
- Johannes described the challenge of evidencing traction without sales and shared how customer interviews and market validation helped him win early investor interest.
- Gabriel highlighted how framing traction in terms of progress like product milestones, partnerships, or user adoption, resonated with investors.
- David stressed the role of grants and SEIS/EIS in giving founders more leverage pre-revenue.
- Martina and Alan reinforced that honesty about risks can actually strengthen investor confidence if paired with a credible mitigation plan.
- Magda noted how culture shapes expectations: UK investors often want to see a clear path to revenue, while US investors may back a bigger vision earlier.
Key takeaways
- Pre-revenue investment is possible, but you must evidence traction creatively through users, intent, and partnerships.
- Use SEIS/EIS and grants to reduce perceived risk for angels.
- Strategic investors can add credibility, but alignment is critical.
- Strike the right balance: optimism inspires, realism reassures.
- Remember: investors back people as much as numbers. At pre-revenue, the credibility of you and your team is also important.
What next?
If you are preparing your business for investment, why not join a free, online Funding Strategy Workshop where you will hear three insights that increase your chances of successfully raising investment and ask any questions you may have. Book your place.
FAQ: attracting investors pre-revenue
What does pre-revenue mean for a startup?
It refers to startups that have not yet generated sales revenue, often still in product development or early testing stages.
Can pre-revenue startups raise investment?
Yes. Angels and even some VCs may invest pre-revenue, especially where SEIS/EIS tax relief applies or where there is strong evidence of market need.
How can startups show traction without revenue?
Through customer letters of intent, pilot programmes, sign-ups, engagement metrics, and product validated feedback from target users.
Are UK investors less likely to back pre-revenue startups?
Some UK angels are cautious, but many do invest pre-revenue—particularly under SEIS/EIS. Cultural differences mean US investors may back vision earlier but expect faster growth.
Should founders consider strategic investors pre-revenue?
Yes, if their goals align and the partnership accelerates your growth. But be careful not to let a corporate investor dictate your roadmap.
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