- Lockie Andrews says founders chasing early revenue often choose the wrong customers out of desperation and create churn and product distraction.
- She advises startups under ~$1M revenue to prioritize angels and operating discipline rather than raising venture capital too early.
- Founders should target patient early adopters who give constructive feedback and stick through rough edges, not just anyone who will pay.
- By building traction and investor relationships first and approaching VCs around ~$3M revenue, startups gain leverage on valuation, terms, and alignment.
Read More
In a recent panel at CES 2026, Lockie Andrews—angel investor and founder of Catalyst Consulting—offered pointed guidance for early-stage startups trying to reach their first revenue milestones and navigate funding. Drawing from her experience working with some dozen startups monthly, she identified two common pitfalls: desperation in selecting early customers, and premature pursuit of venture capital. Her advice is backed by broader startup research and financial trends, suggesting a growing shift towards greater selectivity and capital discipline among founders. ([bvp.com](https://www.bvp.com/atlas/the-founders-playbook-for-scaling-to-1-million-arr?utm_source=openai))
Customer selection as foundation: Andrews warns that when startups are trying to hit their first $100,000, they may accept customers who are ill-suited—those who don’t understand your limitations, aren’t patient through early bumps, or offer poor feedback. Poor fit can damage product evolution and churn. This resonates with advice from other sources: defining an “ideal customer profile” (ICP), focusing on early adopters who value product promise over polish, and using founder-led sales to deeply understand market needs. ([bvp.com](https://www.bvp.com/atlas/the-founders-playbook-for-scaling-to-1-million-arr?utm_source=openai))
Revenue thresholds and timing VC engagement: Among Andrews’ key insights, she suggests that startups making under $1 million in revenue should generally delay seeking VC funding; instead, focus on angels until surpassing ~$3 million in revenue. This aligns with research showing that most billion-dollar businesses either avoid or significantly delay VC and build meaningful scale first. ([forbes.com](https://www.forbes.com/sites/dileeprao/2025/12/08/startup-funding-in-2026-how-unicorns-will-take-off-without-early-vc/?utm_source=openai))
Strategic trade-offs and leverage: Delaying VC isn’t merely avoiding dilution; it’s about choosing investors with aligned expectations and avoiding pressure to conform to growth trajectories that aren’t yet sustainable. Research confirms that unicorn founders who avoided early VC retained far more wealth. It also allows you to build a more resilient base—customers that stick, markets you deeply understand, and financial discipline. ([blogs.lse.ac.uk](https://blogs.lse.ac.uk/businessreview/2018/12/13/why-entrepreneurs-should-avoid-or-delay-venture-capital/?utm_source=openai))
Open questions: What metrics beyond revenue should be used to determine readiness for VC (e.g., retention rates, LTV/CAC ratio)? When is the right moment to move from angel to institutional capital? How do sector differences (hardware, SaaS, consumer vs. B2B) shift these thresholds? And what trade-offs might arise—for example, scaling more slowly but with stronger unit economics vs. rapidly growing with higher risk?
Supporting Notes
- Lockie Andrews has worked with ~12 companies each month and argues one of the biggest problems at the early stage is desperation for the first revenue leading to picking bad customers.([forbes.com](https://www.forbes.com/sites/dileeprao/2025/12/08/startup-funding-in-2026-how-unicorns-will-take-off-without-early-vc/?utm_source=openai))
- Andrews advises that startups generating $1 million or less in revenue generally should not seek VC funding, and that angel investors tend to be more patient with young startups.([forbes.com](https://www.forbes.com/sites/dileeprao/2025/12/08/startup-funding-in-2026-how-unicorns-will-take-off-without-early-vc/?utm_source=openai))
- She recommends building relationships with investors ahead of time, so that when the startup hits ~$3 million revenue, VCs will be more prepared and willing to invest.([forbes.com](https://www.forbes.com/sites/dileeprao/2025/12/08/startup-funding-in-2026-how-unicorns-will-take-off-without-early-vc/?utm_source=openai))
- From Bessemer’s “Founders’ Playbook,” best practices to reach the first $1M ARR include defining a narrow ideal customer profile, having the founder lead early sales, and iterating small playbooks before hiring.([bvp.com](https://www.bvp.com/atlas/the-founders-playbook-for-scaling-to-1-million-arr?utm_source=openai))
- Data from analyses of unicorn founders shows ~94% built significant momentum before engaging institutional VC, keeping more control and equity.([forbes.com](https://www.forbes.com/sites/dileeprao/2025/12/08/startup-funding-in-2026-how-unicorns-will-take-off-without-early-vc/?utm_source=openai))
- Warnings from startup case studies show that rapid revenue spikes without retention or product-market-fit can lead to high churn (%70 or more) just weeks or months later.([linkedin.com](https://www.linkedin.com/posts/jungkeunhong_a-startup-we-hit-1m-arr-in-just-2-months-activity-7363289852605288448-8eQq?utm_source=openai))