Venture Capital Strategy: How to Think Like a Venture Capitalist

1. the need for cash to grow; and 2) the desire to avoid dilution.

For traditional businesses, this could be reworded into the objective: to grow and profit. It turns out that those two outcomes, growing and profiting, are in conflict, and for venture-backed startups, the latter half of the goal (to profit) may not even be necessary.

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.

that acquirers are looking for, often in combination: revenue, customers and capabilities.

A hit-driven industry is one in which big winners pay for lots of losers. Numerous bets are placed on opportunities that have the potential to be hits, with the full understanding that a significant percentage will not work out. Failure is a necessary part of the plan.

The second-best scenario is a serial entrepreneur CEO planning to build out a new team. Third best is a team that did amazing things, but perhaps due to macro market conditions did not achieve a high return for investors.

C-Corps are only entity that is allowed to create preferred shares of stock.

signal. Founders may be in business for the wrong reasons or be pursuing the wrong objectives.

In other words, we can use the competition’s customer adoption success as an indicator of our startup’s potential acceptance in the marketplace.