It’s a Source of Cash. The most obvious reason one-time revenue is valuable is that it’s a source of cash to fund overhead. Indeed while a VC or acquirer may not ascribe a multiple to that revenue stream, they’ll absolutely look at it as “financing” for the core business. While the business is still burning money, one-time revenue is as important as recurring revenue as a source of cash.
It Can Make You Sticky. Too many companies today focus on building products that are low/no touch. Their idea is to build a product that’s so good, the customer never has to call you for anything. On paper that sounds amazing but in practice, it’s not practical as the customer wants customer service, especially when ACV is $24k+. It’s about not just being a product, but a solution. Solutions include the product but also encompass a level of touch with the client, and companies that touch their clients often with consulting, services, or ancillary needs tend to have way less churn.
sammy@blossomstreetventures.com
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