Silicon Valley *Is* a Meritocracy
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venture capital timeline. And in the summer of 2010, none of those experiments had yet been done. I had no validation of my business model, pricing model, or customer acquisition strategy.
If I committed myself to a VC timeline without those gaps filled and the business ramped slower than the VCs would like, I would either get diluted to the hilt or go out of business for lack of follow-on financing.
Instead, I kept 1M/1M as a slower-growing bootstrapped operation and continued to fill the gaps. Today we have success stories, and our product, business model, and pricing model are all validated. What’s more, we have been adding value to the journeys of numerous entrepreneurs.
Why do I tell you this story?
Because I want to caution you against using the excuses like “Silicon Valley is biased against women” or “Silicon Valley is biased against black entrepreneurs” and so forth, and turn your attention to the real issue: figuring out what are the gaps in your business, and what you can do about them. What strategy makes sense to address those gaps?
If you follow my writings, you know that I have said repeatedly that over 99 percent of entrepreneurs who apply for funding are rejected. The reasons are many.
Some seek financing too early, as I did. The only reason I did that, by the way, was that 1M/1M is my fourth venture, and I have relationships with people in the industry who would at least consider funding me even if the business was not fully validated. In the end, though, raising money with that many unvalidated issues did not feel right even to me, let alone to investors. For first-time entrepreneurs, it is not even an option.
Others are rejected because their total addressable market (TAM) is too small. Or their technology is not defensible. Or the team is not compelling. All these are legitimate reasons and, yes, there is plenty of subjectivity in the decision process. But by and large, the vast majority of rejections are for good reason.
Further, it is a well-known fact in the Valley (and elsewhere) that the bar for investment is rising ever higher. Even angel investors do not fund businesses without traction these days, meaning what could easily have been funded in 1999 is unfundable in 2012. Unfundable, period. Not because you are black, or a woman, or an older entrepreneur. It is because in this meritocracy, the “merit” that warrants financing is a “momentum business.”
So, what is an entrepreneur to do?
If you ask me, I would always say, plug your gaps. Bootstrap through the various stages of validation. Build momentum. Get to a point where … Next Page »