The Startup Velocity Question - What Hinders Acceleration in VC Funded Companies?
Sramana Mitra
Founder and CEO of One Million by the One Million (1Mby1M) Global Virtual Accelerator
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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.
However, 9 out of 10 venture-funded startups do not attain the kind of velocity that yields Unicorn valuation.
What happens to venture funded startups that fail to accelerate after Seed, Series A, Series B or later rounds of funding?
Among other things, they fail to raise additional funding. Runway runs out. Companies fold up or get sold for cheap. Entrepreneurs lose years of their lives. Hopefully they learn. If they have the energy, they start another company.
Yet, given that VCs invested in these companies after significant due diligence, these companies were considered high potential once upon a time.
It is worth considering what went wrong.
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What is the RIGHT funding strategy at this juncture?
A diagnostic is necessary.
The Human Element needs to be managed.
Let us dig deeper.
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Great insights! To foster rapid growth, consider implementing A/B/C/D/E/F/G testing for more granular insights into customer preferences, which can significantly influence your marketing strategy and product development.