Ironically, the longer a company has been in business with slow growth, the less attractive it is to a VC doing early stage investment.
One would think that such a company can turn around and more easily become successful than a company which has only an MVP that generates no money, but that’s not how VCs see it. They want to see “traction”, and even better, a company amassing users like wildfire.
Twitter had no revenues for years but was raising at a $100M+ pre-money valuation because of user growth alone.
If Twitter had added a business model and generated revenue but didn’t have the hockey stick 5 years in, then VCs would actually be more averse to invest in it.
I would think the key if you’ve been in business for a while and have lackluster growth would be to sell investors on why the new direction you’re going in has so much more potential than what you’ve done so far. Even if it’s not a pivot, it might be better if it sounds like one. That way, instead of extrapolating from your current numbers (bad for you), investors can give you more of a clean slate.
Already having a userbase, revenue, a team, etc. in place is a massive advantage, because these things are so hard to accomplish. If you tell the right story, you should look infinitely better than an early stage company that pivots due to lack of traction (and the latter get funded all the time).
The Lindy affect applies to survival as much as it does to upside. If a business has been the same way for 30 years, it's much more likely to survive another 30 than a new company, but those 30 years will likely be similar to the first. Not all parts of the economy have such a fast up and down curve, so the 30-year business might be an appealing investment or not. Huge delta might be for some investors, but Lindy effect durability is very desirable to others.
One would think that such a company can turn around and more easily become successful than a company which has only an MVP that generates no money, but that’s not how VCs see it. They want to see “traction”, and even better, a company amassing users like wildfire.
Twitter had no revenues for years but was raising at a $100M+ pre-money valuation because of user growth alone.
If Twitter had added a business model and generated revenue but didn’t have the hockey stick 5 years in, then VCs would actually be more averse to invest in it.