Venture Capital Strategy: How to Think Like a Venture Capitalist
When VCs are assessing a market, we want to make sure that the pond is big enough for the startup to grow exponentially. An old rule of thumb is that there needs to be the potential for a $1B market to warrant a VC investment.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
If a startup was founded to serve one customer segment and has switched to another, we want to make sure we understand why. One questionable reason for a pivot would be zero traction in the first market and a speculative foray into a new space. In that case, we may be building off a track record of failure. That does not ensure a future of failure,
... See morePatrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
In early stage startups, we need to make up numbers all the time. Then we need to test them. One of the main jobs of early-stage startups is to validate hypotheses.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
scale. Is the improvement enough to compel customers to change behavior? This leads us to a third step in defining a value proposition: after identifying customer pain points being addressed by our better/faster/cheaper solution, we need to quantify the value that we are creating.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
startup could be addressing a compelling market need, have the right team in place in an attractive industry, yet still the math might not work.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
This can be a challenging aspect of the job for young VCs: pushing back on the founders’ ideas about which customer segments to target. A surprising number of early stage startups are not sure (yet) which market they should go after. In fact, this can be the source of great conflict. Agreeing on which markets to pursue can be an important part of t
... See morePatrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
VCs spend a lot of time at industry events to keep these networks active. National conferences, venture showcases and even startup competitions, all of which are opportunities for VCs to nurture relationships with experts who might eventually be helpful for sourcing deals, performing due diligence, finding a strategic partner for a portfolio compan
... See morePatrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
True, the underlying technology is vastly different, but from the customer’s perspective, they all serve the same function: to get rid of mice. Hence, they are competitors.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
VCs may begin imposing strategic direction toward becoming the perfect acquisition target while founders are focused on creating the most sustainable company.