Building successful companies without venture funding
People often ask me: how can you create successful outcomes for founders if you advise them NOT to pursue VC money?
That’s easy.
We focus on what we call “rational startups”.
For us, that means… businesses that we believe can grow to a minimum $10m outcome WITHOUT venture funding.
To do that:
- The founder needs to be able to grow the business on its own revenue, either without any funding at all or with a single, “one-and-done” funding round.
- The market opportunity needs to be big enough to support at least $2.5 – $10m in revenue (depending on the business and typical exit multiples).
- The founder needs to be able to build a company that, in time, is not 100% reliant on them personally.
- The business needs to offer enough value to enough people that it consistently generates new business leads, without so much cost and/or effort that the business model becomes unworkable.
There are a LOT of businesses that meet those criteria.
If we can tick those boxes, success generally boils down to a combination of founder pedigree, insight, appetite, network, and our collective ability to de-risk the process of going from A to B.
For rational startup founders who make it to an exit of $10m, that usually means between $6m and $8m in their bank account.
We think there are a LOT of people who would consider that acceptable.
How about you – what’s your number?
P.S. By the way, if one of our portfolio companies starts growing like a rocketship, of course we’ll be the first to call our VC friends; but the truth is (and what any VC will tell you behind closed doors) MOST businesses simply don’t fit the profile.
