So, you have a great business idea - you believe it’s the next best thing since sliced bread. You’ve mapped out the business model and identified your target market, but there’s one major issue: you’ve got no revenue. Will investors still listen?
According to experts, the answer is yes — if you can demonstrate certain non-financial fundamentals.
“Even before you're in the market, before you have a single customer you can still secure investment,” said Naidoo. “If it's a good idea, if I believe in it, and if I think I can add value to it — then yes, even post-revenue, we’re open to a conversation.”
Venture capitalists (VCs) and angel investors, they emphasised, aren’t always backing a business for control - they’re backing founders they believe in.
Why Focus and Simplicity Win Investor Trust
Most entrepreneurs mistakenly believe that generating revenue is a prerequisite for fundraising. But in reality, it’s more important to have clear business structures, a compelling model, and a scalable product roadmap.
Focus is key. According to Khan, many founders try to do too much too soon - chasing multiple revenue streams or products instead of refining their core solution.
“I was helping a client raise capital and saw 'methanol' listed in their use of funds,” he explained. “When I asked, he said it was for an alcohol product — but we were trying to raise funding for something else entirely. Don’t be a jack of all trades. Stay focused.”
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Building a Financial Model That Attracts Investors
A solid financial model isn’t just about tax compliance or accounting - it’s a roadmap that helps you navigate growth, mitigate risks, and allocate resources effectively.
“When we talk about financial models,” said Naidoo, “we’re looking for signs that you've thought through how your business will grow — your revenue drivers, your market strategy, your customer acquisition and retention plans.”
Khan echoed this sentiment, stressing that your business model doesn’t need complex spreadsheets or formulas - but it must communicate a clear narrative.
“It shows us that you understand your customer and how you're going to grow. You don't need to be an Excel wizard — just tell your story in numbers,” he said.
Avoiding Valuation Mistakes That Scare Off Investors
Valuation is often the sticking point for early-stage deals. Founders may base their evaluation on money spent, effort invested, or market comparisons - but that’s not good enough for investors.
Angel investors like Khan acknowledge that risk appetite at early stages is high - but so are expectations for ROI.
“It’s not about the stage,” he said. “It just has to make sense. Every investor is looking for a strong return.”
Naidoo noted that one of the biggest disconnects is between what founders believe their business is worth and what investors see as realistic. He cautioned against benchmarking your valuation against other startups.
“Your business is unique,” he said. “You need a valuation framework that reflects your value proposition. Don’t tell an investor your business is worth R100 million because someone else’s is. You must be able to explain how you’ll grow — because investors buy into the future.”
Final Advice: Structure and Clarity Win Funding
The key takeaway from this discussion is that you don’t need revenue to raise funding - but you do need structure. A clear financial model, a focused vision, and a clear understanding of your business drivers are what investors look for in pre-revenue ventures.
In the words of these experts: clarity trumps perfection. If you can show a compelling path to growth and articulate your value, the capital will follow.
Lungile is the Digital Editor for TechAfrica, with a knack for storytelling, technology and innovative ideas. Working with TechAfrica, she takes simple ideas and turns them into amazing stories.
