value creation

What is this “momentum” of which you speak?

Derek Pilling, , , 1 Comment

A meeting with an entrepreneur last Friday reminded me of the most frustrating and overused feedback entrepreneurs receive from VCs:
Talk to me when you have “momentum”; or

I need to see some “traction” first.
With more and more VCs looking to make later stage investments, entrepreneurs are receiving this feedback more than ever. You can understand why an entrepreneur might find this feedback frustrating. If they had massive traction, they probably wouldn’t need VC money, or if they did, the deal should be priced at a much higher valuation. That said, the real issue with this feedback is that it triggers a conversation about the definition of momentum. Entrepreneurs complain (rightly so I might add) that the VC definition of momentum comes in the following forms: 1) VC defines momentum by saying; “I know it when I…

What is this “momentum” of which you speak?

Why VCs Need to Create Value

Derek Pilling, , 2 Comments

VentureBeat’s Entrepreneur Corner has a must read post today on the recent history of the Venture Capital business model. Every entrepreneur should read this, particularly those looking to raise venture capital and in the enviable position of being able to select the right investor for their company.

The author, Steve Blank, walks the reader through four distinct exit market cycles and discusses venture capital behaviour and philosophy in the context of those market cycles. The title of the article is a bit misleading as it posits whether or not you can trust VCs under 40. I’ll return to that later; suffice to say for now that it is one of those titles intended to stir controversy, but not fundamentally of value. 

Why VCs Need to Create Value