Finally Startups Have realised That You Actually Need Revenue To Run A Business

paul graham making it rain moneyPaul Graham, Y Combinator founder, making it rain.

Now that investors are investing in fewer early stage companies, startups finally seem to understand what it takes to run a business:

Revenue.

Y Combinator, the prestigious startup accelerator that helped launch billion-dollar companies Dropbox and Airbnb, held its demo day yesterday in Mountain View, California.

More than 500 investors and journalists watched young entrepreneurs pitch 47 new companies. Instead of presenting social media apps which were plentiful in the accelerator’s last batch, the founders focused more on transaction-based businesses that can make money immediately.

Many of the founders emphasised revenue growth charts in their presentations rather than user growth charts. Business ideas included a way to control devices with gestures that has generated $3.7 million already, and an insurance search engine that operates like Kayak. Last year, entrepreneurs presented social networks for couples and video sharing apps.

“[Social-networking-related startups] have┬árun their course,” Googler and startup investor Don Dodge tells WSJ’s Digits. “Now startups are more focused on solving boring problems that make money.”

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