Investing in pre-revenue startups: pros and cons
Investing in pre-revenue startups: pros and cons
Hey guys.
Last week I came back to work on the platform to help more people become tech entrepreneurs. I prioritized the next stage for development with my team and started working on a marketing strategy for 2023.
This week I prepared data about the micro-acquisition market for 2022. I shared my thoughts about pre-revenue startups and why they might be a good acquisition target for someone.
We also started partnering up with other makers and newsletters to spread the word about Microns. If you have a tech audience (entrepreneurs and investors), feel free to reach out directly.
This time I'm giving a shoutout to my old friend Jakob who built and launched many startups for indie hackers. In addition, he co-founded a new project with a partner called DamnGoodLeads. It helps to manage your cold outreach campaign for an affordable price.
P.S. I still do cold emailing for Microns because it works well with a proper email script.
👋 Welcome
Welcome to the 62 new people joining this week.
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🎉 Recently sold startup
Another small deal was closed successfully. The transaction started when the wave of hype about AI tools and apps only began. After this, many AI-driven projects appeared on Product Hunt and Indie Hackers. I like that Microns becomes the platform where early trends and innovative projects are revealed first (that's why we have a .io domain which means innovation, not .com).
As you can see this founder spent seven weeks from building the project to selling it. This is all because he had a lot of development experience and had previously run a few startups. Besides this, I see a few other success factors: timing and product.
The timing was chosen 100% right because the topic became hot after the ChatGPT launch. Another success factor is that product solved a real problem that people are willing to pay for. Even I needed a tool to help me craft and send cold DMs on Twitter. Because doing this manually takes a lot of time.
P.S. If you send us a founder who would sell the project on Microns, we'll pay you a $100 bonus for referral. The only requirement is that the transaction should flow through our escrow service.
📊 Market annual report: 2022
As promised, here's our slice of data about the micro-acquisition market. We're still a small platform, so there may not be enough data to make a constructive summary.
Of the ones we published, total number of categories we published:
Micro-SaaS: 70
Web Apps: 20
Databases: 15
Mobile Apps: 14
E-Commerce: 11
Newsletters: 10
Communities: 9
Extensions: 8
Directories: 8
WP Plugins: 7
We sold 21 micro-startups in 2022. The GMV is $130,000. We sold 6 web apps, 5 micro-saas startups, and 4 Add-ons/Plugins. The smallest project was sold for $150. The largest project was sold for $40,000.
🧵 Pre-revenue startups
In this issue, you'll find three pre-revenue startups for sale. I intentionally featured them to cover the broader topic of such startups and highlight their pros and cons.
There is a good chunk of projects with growth potential and some traction but no revenue for some reason that you could invest in. Those startups are great for entrepreneurs with experience. But, unfortunately, they're the wrong targets for beginners.
If you want to avoid overpaying for revenue multiple, have experience growing and building startups and free time. Then you should consider pre-revenue startups as one of your acquisition targets.
On Microns, we have around 20% of such projects and balance them with profitable startups. We have strict criteria to publish such projects and filter any trash or overpriced projects. We don't publish CodeCanyon scripts, templates, domains, or unfinished projects. We sign up and try the project before sending it to our premium members.
Thus, choosing the right pre-revenue project could give you at least 100% ROI. I even saw a 2,000% ROI. Which might be an attractive opportunity, but only in the right hands. So, I recommend targeting such products only if you have experience and a lot of spare time to work on it.
📰 Looking for new owners
WFH Content Website
Pre-revenue
Business model: Ads
800 subscribers
Target audience: People that work from home
Built with WordPress
Founded in 2020
Growth opportunity: Focus on organic SEO and build the database of office tours
🔥 Asking Price: $500
SMS Idea Tracking Tool
Pre-revenue
Business model: One time purchase
2 customers
Target audience: Entrepreneurs
Built with FastAPI, Postgres and Twilio
Founded in 2022
Growth opportunity: Use social media and targeted newsletter sponsorships to attract users
🔥 Asking Price: $1,000
Crypto Donations Tool
Pre-revenue
Business model: Commission
10 customers
Target audience: Creators
Built with Next.js, Alchemy and Vercel
Founded in 2022
Growth opportunity: Focus on niche creator communities for outreach
🔥 Asking Price: $1,500
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Stay awesome,
Ilya Novohatskyi