Funding models: The Jurassic periodGraham-45X64.jpg
Posted by Ian Graham

Had an interesting conversation with a local entrepreneur this morning. One topic of keen personal interest that came up was how outdated the current VC funding model has become, and is it in fact an anachronism from a bygone time, much like the Jurassic period is to the dinosaur. The funding environment has changed significantly since the bubble burst; however, the VC funding model has remained relatively, at least from my perspective, the same. My simplistic take is that the Jurassic VC funding model (Series A to X) is built on funding companies that will reach the $100M revenue in five years homerun. The problem with this model is that the number of companies capable of reaching $100M in revenue within 5 years is miniscule. Of the 300 - 400 companies I have met in the past two years there is maybe one that would be $100M in 5 years. This adds some more fodder to the Funding Paradox series of posts. I have, however, met plenty of companies that would and/or could be $20M to $50M companies within 5 - 7 years. Therefore alternatives to the VC funding model would seem to make a whole lot of sense if you are serious about building a strong local economy. Click here to read more of Ian's blog.

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