We looked at the funds invested in Reg CF and Reg A+ equity deals that hit their minimum in the last 12 months and made some interesting discoveries:
  • The median amount raised by pre-revenue companies ($151k) is higher than post-revenue companies with $1-$250,000 in revenues ($103k-$138k).
  • Many exciting deep tech or pharma companies are raising pre-revenue and may be able to attract large sums from investors.
  • Once the $1 million annual revenue threshold is surpassed, the median amount invested in deals jumps by 2.5x, indicating higher investor confidence in these companies.
  • However, the average amount invested doesn’t significantly increase until surpassing roughly $2.5 million in revenues. Thus, while investors are more willing to invest in companies with over $1 million in revenues (according to the median), the average amounts raised do not significantly increase until the $2.5 million revenue threshold.

Léa’s View

A company’s revenue reveals a lot about its investment potential. Higher revenue boosts investor confidence in the team’s execution capabilities, the demand for the company’s product, and the market’s attractiveness. Investors also become more lenient about a company’s valuation once it generates revenue. However, they shouldn’t be blindsided. Revenue alone doesn’t indicate growth potential. That’s why KingsCrowd analyst reports highlight contracts, advantages over competition, and market drivers that will help a company grow quickly and provide returns to investors.