by Randell Young, General Partner, Venture-Net Partners
Don’t scan several dozen articles or watch a few episodes of Shark Tank and think you have the venture capital industry figured out. Most of what you read is just one misinformed journalist repackaging the same talking points of another misinformed journalist. As for Shark Tank, read the fine print. It’s all for show. Even when they make a so-called offer, the contestant has signed off in advance that nothing said, offered or agreed to on the show is binding. It’s a scripted reality show where “reality” is really a code word for fantasy.
If you read the Venture Roulette section of G20 Intel (G20intel.com) for a few weeks, you will see deals done at various stages of development including pre-revenue, pre-minimum viable product and even pre-prototype.
Envision your deal as falling somewhere along a continuum that starts with a business concept scribbled on the back of an envelope and ends with a fast-growing company that is setting the world on fire with sales and profits. In between these two extremes are a nearly infinite number of developmental milestones. Venture capital deals are done at all points on this continuum.
Somewhere, there is a threshold at which multiple funds will be willing to invest in your enterprise. It might be at one extreme or the other or (more likely) somewhere in between. There is no way to know at which such point your venture will attract investors until you put it on the radar of all the funds that are active in your space and if need be, keep it there and keep making progress until somebody gets it.
“Many of life’s failures are people who did not realize how close they were to success when they gave up.” — Thomas Edison
The truth and irony of the situation is that there are entrepreneurs who will read these words that could have connected with and been one of the 150 or so deals closed everyday by US venture capital funds but they were so intimidated by the misinformed advice of some guru-wannabe that they failed to invest the time, energy and money necessary to put their deal in front of the 540 or so VC funds that control 96 percent of all the dollars invested in startups.
They were on the one yard line and never knew it.
“Most people give up just when they’re about to achieve success. They quit on the one yard line. They give up at the last minute of the game one foot from a winning touchdown.” — Ross Perot