As an early-stage startup, the pressure to acquire customers is high. Generating revenue early on is crucial, as it is a key metric that investors consider when evaluating the growth trajectory of a company from seed to Series A round.

Without significant revenue, securing funding for the next round can be challenging. Alex Kayyal, a partner at Lightspeed Venture Partners, emphasized the importance of finding the right early partners during his talk at TechCrunch Early Stage in Boston.

One common issue for early-stage startups is the reliance on a single large customer. While this customer may be influential, it is essential to cater to a broader range of use cases to drive sustainable revenue growth.

Building a startup is like building a house

"One of the toughest decisions for startups is learning when to turn down potential revenue from a customer offering a substantial sum for your product," Kayyal said. While the temptation to accept a large check from a single customer is strong, it is vital to avoid becoming solely dependent on one client and neglecting the needs of other customers.

The risk with a single big customer is that they can exercise disproportionate influence over a startup, dictating terms and pricing. This imbalance of power can jeopardize the company's autonomy and growth prospects.

While accepting immediate revenue may seem appealing, startups must prioritize building relationships with a diverse customer base. Knowing when to decline an offer and identifying the right time to engage with a high-profile client are essential skills for young companies.

Keep your business model simple

"Engaging in excessive customization and feature development for a single customer may result in a product that does not resonate with the broader market," Kayyal cautioned. "The ultimate goal is to achieve product-market fit that is scalable and applicable across the industry, not limited to one client."