Imagine you're a first-time entrepreneur with an unvalidated business idea and no track record of making money for investors. You may have another kind of track record, such as working successfully at a large company. Or you could be a young entrepreneur, fresh out of college, ready and raring to get yourself launched. Unless you are willing to bootstrap yourself to some degree of validation of your concept, and can convince investors that there is real demand for what you offer, and a really large market, no one will write a check.
Certainly not VCs. Not even, these days, angel investors. You can go to an incubator and potentially try to convince them to write a $15-$25K check to get your idea off the ground. However, the best incubators also look for large, venture fundable business opportunities. Let's suppose your idea is a good, viable business idea, but not a billion dollar market opportunity. What do you do then? Now consider this. There are many more $5 million, $10 million, or $20 million business opportunities out there than billion dollar ones. Those don't fit the VC model, but if you build a $15 million-a-year business that generates 30% profit year-over-year, what's wrong with that picture? Even an entrepreneur with a smaller idea that is not fundable can build a great company. The initial cash needs to come from revenues, not financing. But later, as the business finds its stride, generates profits, it can offer the opportunity and cash for pursuing a bigger idea.
Certainly not VCs. Not even, these days, angel investors. You can go to an incubator and potentially try to convince them to write a $15-$25K check to get your idea off the ground. However, the best incubators also look for large, venture fundable business opportunities. Let's suppose your idea is a good, viable business idea, but not a billion dollar market opportunity. What do you do then? Now consider this. There are many more $5 million, $10 million, or $20 million business opportunities out there than billion dollar ones. Those don't fit the VC model, but if you build a $15 million-a-year business that generates 30% profit year-over-year, what's wrong with that picture? Even an entrepreneur with a smaller idea that is not fundable can build a great company. The initial cash needs to come from revenues, not financing. But later, as the business finds its stride, generates profits, it can offer the opportunity and cash for pursuing a bigger idea.
