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In: Startups

Simple overview of why only multiple Unicorns make the VC business model work. In this example, a $200M VC fund needs to make $5B in exits to achieve its own investors’ expectations. Times have changed!

In a world where applications are delivered via cloud and distributed across billions of Internet-connected end-points, we’ve seen barriers to entry, adoption and innovation compress by an order of magnitude or two, if not crushed altogether. Compound this by advances in application and data portability and the implication for technology vendors competing in this global, all-you-can-eat software buffet is that customers’ switching costs are rapidly approaching zero. In this environment it’s all about the best product, with the fastest time-to-value and near zero TCO. And it’s this second point – time-to-value (TtV) – that Lenny Pruss wants to dig in on a bit because it tends to be the one glossed over most often. And, of course, Time-to-Value is applicable to any product and market, not just SaaS.

What does it take for an entrepreneur to get funded, and what are the circumstances in which he may be better off growing his startup organically? Here are the 10 basic questions an entrepreneur needs to ask himself before going off in a quest for venture capital funding.