How pre-revenue software startups can climb get credibility faster

All startups have to cross a massive credibility gap on their way from a startup idea to becoming a big company.

Early customers, employees, investors, and partners all have a healthy skepticism about your new thing.

Rightly so. There’s a lot of overselling out there. Very few inventions or startups make it big.

You’re a couple of founders with a big new idea and no revenues yet?

  • “Maybe it could work. Probably not. Who knows?”
  • “Let me know when you get more traction.”

Have millions in revenues, thousands of customers, hundreds of employees? Maybe some brand-name VC funding too?

  • “Must be true. Obviously.”
  • “Irrefutable growth metrics.”

Pre-revenue startups have to claw their way up the credibility ladder with traction proof points and relevant claims, like these:

  • Written customer commitments to buy the prototype you showed them
  • Senior talent joining your startup
  • Big brands as first customers, leading partners with commitments, or key influencers on your advisory board
  • Raving testimonials (and references) from early customers
  • A monthly revenue growth rate of over 10%
  • A clear and compelling startup math story (hear’s how we get to $50K MRR, to $1M ARR, to $5M, etc.)
  • Low early churn rates and high sales conversion rates
  • Actually paying real money for your product (the more the better)
  • Angel funding from senior leaders that know your market space
  • A big market response and word of mouth that spreads

When you get closer to $1M revenue, you have a new set of much more credible traction and proof points, like these:

– Reasonable SaaS metrics for increasing ACV, revenue growth, churn rates, marketing interest, sales pipeline conversion
– A stack of big customer logo references (B2B) or rave customer reviews and ratings (B2C)
– A material number of customers, employees and transactions
– Awards and press in your industry or regional areas
– Early funding from a named VC helps with credibility with B2B customers
– Marketing and sales programs that show repeated success
– Happy employees and partners who are all in
– Market endorsement for your new category story

You start to get irrefutable credibility with numbers of users, revenues, funding, and market response. Nobody can refute those as your current traction and take those away from you.

Irrefutable traction and proof points are what you stand on to ratchet your way up the credibility ladder.

Every entrepreneur should be touting the best credibility points they have currently.

And they should be deliberately creating the next-most important credibility points.

What credibility “history” do you need to create next? How will you do that?

There’s a magic credibility proof point that would make everyone believe what you say. You just don’t have that yet.

Is it a million happy users? $100M funding? An IPO? Accelerating revenue growth? A founder interview on stage at SaaStr?

What’s in your irrefutable “credibility creation pipeline” for next quarter?

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