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Investing in startups: how to maximize your chances in early-stage investment?

After investing in several start-ups, I realized something: I was often investing in companies too early. They didn't even have any revenue yet, but I would let myself be swayed by slide decks and great stories from entrepreneurs.

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The mistake of investing in start-ups with no revenue

Clearly, I’m not the only one making this mistake! In fact, 7 out of 10 Business Angels invest in companies that don't have any revenue yet. (Source: LinkedIn poll from January 2023 on Frédéric Bouleuc's account.)

The problem is that by doing this, I was completely wrong. I thought I was going to hit a home run because the valuations were lower. In reality, I was taking 100 times more risk.

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My new investment thesis

So, after yet another failed investment, I changed my investment thesis. Here is what I put in place:

👉 80% of my deals are in companies that generate revenue

👉 And if there is no revenue yet, the founder must be a second time entrepreneur

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And since then, I have significantly improved my IRR.

In short, the lesson to learn: revenue is better than a pretty deck!

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