The Startup Velocity Question: What Hinders Acceleration in VC Funded Companies?

I have been running 1Mby1M since 2010. I find myself saying to entrepreneurs ad nauseam that VCs want to invest in startups that can go from zero to $100 million in revenue in 5 to 7 years.

Startups that do not have what it takes to achieve velocity should not be venture funded.

Experienced VCs, over time, have developed heuristics to gauge what constitutes a high growth venture investment thesis. 

Not All Student Entrepreneurs Drop Out

Today’s generation of students has a high exposure to the Internet, smartphones, social and many other technologies from a very young age. It is not uncommon to see college students tinkering with technology, starting digital startups, and making millions (and occasionally even billions). Some drop out of school to build their business, but not all. Some stay on in school to get the best of both worlds.

Today, we are going to look at some such student entrepreneurs that we have worked with.

Jeff Nobbs is the founder and CEO of Extrabux, a highly regarded shopping rewards site monetized via affiliate commissions on online transactions. He co-founded Extrabux as a student at the University of Southern California in 2006. He and his co-founder, Noah Auerhahn, who lived in the same dormitory, worked on the project while they were still at school. Two years later in their junior year, they submitted Extrabux to the USC business plan competition, where it won first place and received $25,000, its first stamp of credibility. That helped them build a team and raise close to a million dollars over the next year. They are now on a run rate of over $10 million and their revenue in 2012 was about $5 million. Read more about how Jeff made Extrabux a success in my interview with him.
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Trend Spotting: Entrepreneurship Inside Corporations

There is a real trend developing right now of corporations becoming crucibles of innovation and entrepreneurship in a systematic way. In this post, I will discuss four specific sub-categories of this trend that we’re seeing, and for all practical purposes, participating in.

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Funding Rejection Statistics Of Key Players

You’ve often heard me say that over 99% of the entrepreneurs who seek financing are rejected. This post offers a set of rejection statistics culled from credible sources on some of the key players:

YCombinator: 97.15%

YCombinator started as a summer programme and the roots still show, with courses running for three months, about the length of an academic summer break. Teams all join at the same time, in batches. Applicants are rigorously screened and the best invited for interview. For the latest batch 74 (including six not-for-profits) were selected from a field of more than 2,600. Those lucky few get paid between $14,000 and $20,000 to attend. In return they have to hand over about 7% of their firm’s equity. [Source: The Economist]

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Who Are The Top VCs in Silicon Valley Today?

I have been having this discussion with a few people whose analysis of the venture capital industry I respect. The exercise is not just to assess who are the top investors, but more, to assess where the industry is going, and where the next generation of venture scale companies are going to come from. In this post, I will provide a framework for the discussion. Please weigh in with your thoughts.

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The Future of Education: 10 Trends To Watch

It is that time of the year when we tend to pause and reflect. What have we achieved this year? What are the highlights of culture, business, technology, and trends that we have observed around us?

For me, the most exciting and positive movement at present is in the domain of technology impacting education. And it is an impact that is coming from many different directions.

Let’s explore them in further detail.

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Mentoring Startups: 10 Lessons We Have Learned

These days, everyone seems to be a startup mentor. Whether they have ever done a startup or not, whether they have ever raised money or not, they are ready to advise entrepreneurs.

I want to share with you some things we have learned in running the 1M/1M program for three years. Some background and metrics:

• On January 9th, 2014, 1M/1M will be hosting our 200th free online mentoring roundtable.
• We started experimenting with this format of mentoring way back in the fall of 2008. At the time, 1M/1M did not exist, not even in our heads. It wasn’t until my January 2010 New Year Resolution that the concept was born.
• The 1M/1M premium program was launched at the end of 2010. It took us about one year to figure out how to do what we were hoping to do: help entrepreneurs at scale.
• Almost 20,000 people have participated at our free roundtables. At least 1000 have pitched.
• Recordings are made publicly available at our YouTube channel.
• We use the same format in our private roundtables for the premium members, although those recordings are not available except to the members. We’ve done private sessions every week for the last three years.
• We have been able to develop and enrich a curriculum that entrepreneurs use in web self-service mode over the last 3 years. These curriculums, increasingly, are able to address questions from the entrepreneurs without the need for interactive sessions. As such, when we do get into interactive discussions, they are on more sophisticated issues. The basics can be handled by the curriculum.
• Obviously, the feedback is good, or else, we wouldn’t be able to continue with such a consistent, long-running effort.

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How Do You Develop Seed Ecosystems Around The World?

In the last five years, there has been a distinct globalization of entrepreneurship. There is a lot more romanticism about startups now, a lot more startup related events, organizations, incubators, so forth and so on.

However, the seed capital eco-system around the world is inadequate. How do we change that?

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Innovation’s Next Decade

While the world economy continues to look shaky, the technology industry has never looked stronger.

Now is perhaps a good time to stop for a moment and reflect on what the next decade will be all about for the industry.

My vision of what the technology industry needs to focus on is best described by the title of Michael Dertouzos’s book The Unfinished Revolution (Dertouzos was the head of MIT’s Laboratory for Computer Science, where I was a graduate student). The revolution that Dertouzos talks about is in “human-centric” computing. Indeed, today’s open problems are not so much in the domain of chips and networking as they are in the more human-centric domains.

For example, the technology that makes it possible for a digital worker in rural Africa or small-town India to work on data processing projects already exists. What do not yet exist are systematic methods of locating such projects and connecting these remote digital workers to them.
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How To Bootstrap a Company While Still Working a Full-time Job

At 1M/1M, we’re formalizing the process of ‘bootstrapping with a paycheck’ actively, in recognition of the fact that in many parts of the world, there isn’t much of a seed capital eco-system. Thus, somewhere between 6-24 months of bootstrapping while holding on to a full-time job is a reasonable option for many aspiring entrepreneurs.In fact, I would go so far as to say that most aspiring entrepreneurs ought to start their entrepreneurial journey while sitting inside a corporate umbrella. Especially for technical people, it allows for the enhancing of their technical skills, while also developing the bricks needed to build a venture. >>>

Indian Venture Capital: Age of Reckoning

Ashish Gupta left Silicon Valley to partake in the bonanza that venture capital in India was supposed to create. He founded Helion Capital, a $605 million fund that has been in business for a while.

The style of venture capital that Ashish and his compatriots at Sequoia, Accel, and others wanted to practice was the classic Silicon Valley model of putting $5 – 20M to work per technology company that is ready to grow at a furious pace.

The trouble is such companies are few and far between in the India of 2013.
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