‘When I was in college guys pretended they are in a band, now they pretend they are in a start-up'(c). Technology development, internet penetration growth across the world and active movement of the generations of self-made proactive entrepreneurs are making this world a better place by offering solutions making our life easier and more enjoyable. Not only this process is very exciting, but profitable, too (look at Mark Zukerberg, of course!). No wonder there are so many aspiring entrepreneurs out there, and no wonder only one out of 100 start-ups makes it through!
If you are one of the entrepreneurs who are driven by a goal to make your company a billion-dollar one (or a ‘unicorn’, in the words of CowboyVC‘s Aileen Lee) – I can totally recommend the article ‘Welcome To The Unicorn Club: Learning From Billion-Dollar Startups’ which provides a great reality check of the industry.
Many entrepreneurs, and the venture investors who back them, seek to build billion-dollar companies.
Why do investors seem to care about “billion dollar exits”? Historically, top venture funds have driven returns from their ownership in just a few companies in a given fund of many companies. Plus, traditional venture funds have grown in size, requiring larger “exits” to deliver acceptable returns. For example – to return just the initial capital of a $400 million venture fund, that might mean needing to own 20 percent of two different $1 billion companies, or 20 percent of a $2 billion company when the company is acquired or goes public.
So, we wondered, as we’re a year into our new fund (which doesn’t need to back billion-dollar companies to succeed, but hey, we like to learn): how likely is it for a startup to achieve a billion-dollar valuation? Is there anything we can learn from the mega hits of the past decade, like Facebook, LinkedIn and Workday?
Continue reading here.
(If you ask me I think whenever the word ‘entrepreneur’ is mentioned in vain, someone’s iPhone freezes for 2 seconds!)