If you think the headline is an exaggeration, think again.
While it seems ridiculous to fund a startup with absolutely no revenue or a sane business model and not many in India would take such a risk, it is happening more so often in Silicon Valley of the West.
Here are some startups which were either funded or acquired with no revenue and no established business model. Note that the list does not include the acquihires i.e., startups acquired purely for their talent.
(All amounts in US Dollars)
1. Dodgeball – Acquired in May 2005
The location based social-networking service which received $1.35 million in funding was acquired by Google for < $30 million. 2. FriendFeed – Acquired in August 2009
This feed aggregation service had $5 million in funding prior to being acquired by Facebook for $47.5 million.
3. GroupMe – Acquired in August 2011
The group texting app startup had raised nearly $10.6 million before they got acquired by Skype (now Microsoft) for somewhere between about $50 – $85 million.
4. Tweetdeck – Acquired in May 2011
Tweetdeck, a Twitter messaging client raised $3.8 million in funding and was acquired by Twitter for $40 million.
5. Instagram – Acquired in April 2012
Instagram’s photo sharing application received $57.5 million in funding before being acquired by Facebook for $1.01 billion
.. and of course, how can anyone forget Google’s $1.85 billion YouTube acquisition which had a relatively negligible revenue and was never profitable.
So, who’s next?
Snapchat – To be acquired in ___ 20xx
This mobile photo sharing app which has so far received $73 million in funding could be the next one.
By the way here is an interesting tidbit on how Snaptchat got its initial funding.
Jeremy Liew, of Lightspeed Ventures came to know of this app from Barry Egers, his partner at the firm who heard of it when his daughter said that Snapchat was one of the three most popular apps at her high school. That is when Jeremy Liew approached Snapchat’s CEO Evan Spiegel through Facebook and provided seed funding of $485K.
Having read this ridiculous thing, does it now make you any confident that your zero revenue startup can get funded and/or acquired as well? 😉
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