Will Marlow

Essentially, proof of concept means that your idea has at least one buyer, and the buyer is getting some measure of satisfaction from your product.  This is different from viability, which means that your company is on its way to self-sustaining revenues.  And both are distinct from fundability, which means your business has the potential to fundamentally change the lives of a large number of people (and would provide a 10x return on a BIG cash investment).  

In a crummy economy, unless you have a track record as an exec who has managed/scaled a successful company, more and more VCs want to see your company producing self-sustaining revenues.  This shows them that you're capable of implementing, not just imagining.  In other words, the 1990s is two decades behind us, and the fact that a good idea with a little market interest was enough to get VCs to open their wallets in 1999 is irrelevant.  In 2010 you need to do everything short of scale it to get interest from pro investors.  

Is any of this a bad thing?  Not at all.  But if you start a startup today, you should know that the seas won't part after you demonstrate proof of concept or viability, but without those two benchmarks you won't be able to make the case that you're fundable either.  If you want an interesting take on this theme, check out a great post by Bill Burnham over at Burnham's Beat. 

Filed under  //   Fundable   Investment   Investors   Proof of Concept   VC   Venture capitalists   Viability  

The rarest and most valuable people in a startup company are the ones who not only understand their role, but can perform that role, even when things that should happen first, don’t happen first.  If you can't find these people, you can still be one of them yourself.

Without these types of people, the first part of a startup would feel like the story of Little Tuppen, whose mother needed water to help her stop coughing, and everyone wanted to help, but they all wanted her to do a different task before they would lift a finger.  (The stream told her to see the tree, the tree told her to see the boy, the boy told her to see the cow, the cow told her to see the blacksmith...)  

In the earliest days, this may be your feeling when you approach your very first investor, who wants you to have traction, or the very first clients, who want to know who your other clients are, or the VCs, who want to know about the other companies you've built and exited, or the potential partners, who want to work for a startup as long as it's already scaling halfway up the hockey stick.

Your only hope is to be the type of person you're looking for, and be grateful (I am) for all of those great people who find you.

Filed under  //   Business plan   early-stage investing   Little Tuppen   Seed-stage   Startup   Startups   VC   VCs   Venture capitalists