A typical startup…

A typical startup…

By Rajesh Setty on Tue 11 Dec 2007, 9:50 PM – 4 Comments

..And a typical VC on a typical startup

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We all know that things change. Almost all of the eight startups that I am involved (in some capacity) have gone through serious changes in business models. Business models evolve and the ultimately the marketplace determines what works.

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VCs know this too. This means that, in most cases the original business model (for which founders are seeking funding) will not be the business model probably a year later. However, it is not easy for the VC (or even the founders) to know what the “real” business model is going to be. If the founders did know the answer to this, they would have presented that to the VCs.

If you want to have a good chance of getting funded, best is to present a team that can not only execute “Plan A” but can also execute any reasonable modification of “Plan A”.

Have a great week ahead.

 

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4 Comments so far, Add Yours

Deepika  on December 11th, 2007

Great post Rajesh. Captures the catch 22 situation beautifully.

Arvind Padmanabhan  on December 19th, 2007

Hi Rajesh,

Reading this post was the perfect desert after our lunch time talks on start-ups.

Cheers,

Arvind.

SD  on December 25th, 2007

Had seen this blog earlier, lost track and found it again and bookmarked it this time. Nice blog.

I’m working in a startup, and the timespan you’ve put up in the diagram seems a little too short (and that too, the MD’s have worldwide contacts). Is it really that way for the startups you’re involved in? Can a startup really make that much profit and progress (in case the people don’t have good contacts in the industry? then?)

Rajesh Setty  on December 25th, 2007

Deepika and Arvind: Thank you.

SD: First, wish you the very best with your new venture. In terms of timelines, it is all over the place. My opinion is that it takes anywhere between 18 to 24 months for a startup to gain momentum. By that time, the startup would also have figured out what is it that they “offer to the marketplace”.

Cheers,

Raj

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