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HOT TOPICS
- The Accelerator Conundrum
- The Startup Velocity Question
- Platform as a Service
- Man and Superman
- Web 3.0 = (4C + P + VS)
- The Future: End of Capitalism
- Capitalism 2.0
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The Startup Velocity Question: VC Portfolios
As discussed, the Venture Capital model looks for hyper growth startups that grow at an exponential pace. Companies that can go from 0 to $100M in revenue in 5-7 years.
Hyper Growth is not a natural state of business. Most businesses grow at a linear pace at best.
>>>The Startup Velocity Question: MicroVC Portfolios
As of December 31, 2023, in the United States alone, there are 54,000 venture funded startups.
Let us refresh our memories on what constitutes the Venture Capital model: hyper growth startups that grow at an exponential pace. Companies that can go from 0 to $100M in revenue in 5-7 years.
>>>The Startup Velocity Question: The Churn Issue
The market is full of companies facing velocity issues due to high churn.
Somehow or the other, they may have managed to sell subscriptions to enterprises, SMBs or individuals.
>>>The Startup Velocity Question: Selling Pieces of a Company
I once worked on a company that was #4 in its market.
The market itself was actually two different markets, one smaller, and one very large.
>>>The Startup Velocity Question: Inability to Explain the REAL Value Proposition
Another scenario I am encountering in my discussions is that of the inability to explain what the company does.
In the best case, the company is able to close deals.
>>>The Startup Velocity Question: Market Shifts Derail Companies
Let’s take a most obvious example: BPO companies offering large numbers of customer support agents to other businesses.
Enter AI.
>>>The Startup Velocity Question: Joining Forces Through M&A
Let’s look further at the issue of solid companies that have achieved $10M, $20M, $50M in revenue, close to breakeven, but not necessarily growing at an exponential pace.
One commonly used strategy is to combine two companies in a related space to achieve growth and rationalize expenses.
>>>The Startup Velocity Question: Linear vs. Exponential Growth
Since this series was published, I have had many conversations with friends in the industry who have added to the issues on the table.
In particular, one that caught my attention is the issue of solid companies that have achieved $10M, $20M, $50M in revenue, close to breakeven, but not necessarily growing at an exponential pace. In some instances, market shifts have caused revenues to flatten or even decline.
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