There's a Lot of Ways to Fit, But Don't Confuse Revenue with PMF

We occasionally hear about companies struggling to fundraise after achieving the milestone that many investors signal as the first indication of Product-Market Fit: a solid revenue number. However, revenue alone isn't the only (or even the most important) signal of Product-Market Fit for a venture-scale business. As obvious as it is to say, a truly great product must also meet the real needs of the market and this is often missed.

For early-stage companies with stellar sales skills or advisors who can help generate revenue, it's very common to see sales acumen propel a company to its first $1M+ in ARR. While this is an important milestone, it's just a starting point. Early revenue should confirm that what you've built is not only sellable but also repeatable and essential for your market.

In these stages, revenue is only one of several critical signals of success. The use cases you solve along with how "repeatable" and "pain-relieving" your solution is needed to serve as proof points for future growth. Testimonials from customers and buyers should clearly validate that your solution delivers definitive value, solves a real need, and positions your company as a long-term partner. This is what separates market disruptors from those that simply meet a revenue milestone (remember, you're trying to build a company that hits $100M+ in ARR…!).

Using the lens of a Founder, Investor, or Customer: which type of company would you rather run, invest in, or buy from?

Company 1

• 9 paying customers, all using the product differently
• Broad use cases but no deep expertise or focus in any single one
• Operates in a crowded market where competitors look relatively similar
• They win because they're the easiest to buy from

Use case A

Customer 1

Use case B

Customer 2

Use case C

Customer 3

Use case D

Customer 4

Use case E

Customer 5

Use case F

Customer 6

Use case G

Customer 7

Use case H

Customer 8

Use case I

Customer 9

Company 2

• 10 paying customers with two very concrete, well-defined use cases
• Still a new entrant in the market but moving quickly, shipping key features that set them apart
• Buyers are aligned with the company's vision; most buy for what the product offers today, and roadmap items are natural extensions of proven strengths
• They, too, are easy to buy from but they stand out by solving specific, repeatable needs

Core use case 1

5 customers

Core use case 1

Repeatable

Core use case 2

5 customers

Core use case 2

Repeatable

→Roadmap

Natural extension

Deciphering (and more importantly differentiating) between key milestones like hitting $1M in ARR or achieving PMF is what separates the good fundraises and scale from the greatest fundraises and fastest growing companies. The best founders we know are able to celebrate each as "wins" without conflating the two and will be the ones everyone wants to emulate.