I am in London and the atmosphere is distinctly changed to when I was here even a few months ago. If there was ever any doubt, now revenue is definitely the new black!
Two years ago everyone wanted to build big consumer web services. Instagram, Foursquare, Twitter and about a million smaller companies were growing at a projectile rates, which left the startup industry trembling with excitement, despite the economic downturn happening in the rest of the world.
Over the last 12 months this has slowly been changing. Because VC funds run over many years, this is happening with delayed correlation to the general economy, which has been seriously under pressure for several years. But now its hitting the startup scene much closer to home; many VC’s are struggling raising new funds.
While a few have been crying for more careful behavior from startups for a while, this week is the first time I’ve felt there is general consensus about it from both investors and founders. The change has been tangible at this years Seedcamp Week, one of Europe’s leading startup events. Founders from established startups have stayed away, preferring to stay at home working, attendees at the event have left early, favoring meetings and phonecalls, and the evening events have been decididly subdued compared to previous years, with everyone having masses of non-postponable work next morning. Overall there is a sense of urgency in the air which I haven’t felt for some time in these circles. And to be fair, rightly so.
The conversation is now openly about B2B, the need to make early and decent revenue instead of relying on being able to raise further funding.
So if you’re an entrepreneur maybe you should think about a B2B business model and be serious about starting to make some revenue. It’s not impossible to raise money by any stretch of the imagination, but you will be expected to last longer on the dollar than a few years ago.