How-to: Improve Your Chances of VC Funding
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In the age of Web 2.0 (or the second bubbling, if you will), it seems like venture capitalists are throwing around money to any company with a funky name. But there are plenty of startups trying to grab some of that cash, so funding is not as easy as it may seem.
Online product developers — Web 2.0 or otherwise — have to compete with a sea of similar products to receive VC cash. But the one way that VCs will look harder at your company than the competition, according to CNNMoney, is to develop multiple products.
Tucked away in an article on some of the worst business ideas is this nugget from Todd Dagres, general partner at Boston-based Spark Capital: "We would rather invest in a hit machine than one product."
Generally, venture capitalists consider businesses that are based on one consumer product too risky because it is nearly impossible to determine whether that one product will be a hit.
Instead, they typically look for companies that are more multi-dimensional to diversify the risk. A solid team with several strong business ideas stands a much better chance of catching VCs' attention - and not getting laughed at when they're standing by the water cooler.
In a market deluged with similar startups, getting that funding requires either a totally unique idea that has never been approached before or a solid business with multiple "new" ideas.
Not every product is going to succeed, but the more products a startup is developing, the more chances they have to produce a hit product.
Filed in Business
