What makes a startup investable or fundable?

Bill Aulet, Managing Director of the Trust Center, often shares that a business has to be in the $20M-$50M range in year 5 in order for it to become a fundable business (i.e. a business that is funded by institutional venture capital investments in the typical angel / seed / A / B round structure).

While the first couple of years will typically limited revenue (due to a laser sharp focus on a small but well defined beachhead market) and will typically be cash flow negative due to all the investments needed to get the venture off the ground, there needs to be "a path to greatness" for investors to take notice.

If a venture is by nature not going to grow in the prototypical hockey stick manner, it can still be a very good business, but it might be better off building this business by bootstrapping it rather than seeking external institutional funding.


Was this article helpful?
0 out of 0 found this helpful

      This website provides general information related to legal and business matters. It is intended for educational purposes only. This website does not and is not intended to provide legal advice. Although we take great care to make sure that all of our information is accurate and useful, if you have a specific issue for which you need actionable advice, please come to the Martin Trust Center in person to speak to one of our Entrepreneurs in Residence or consult a licensed attorney or other professional. No attorney-client, advisor, or other confidential relationship exists or will be formed between you and the Martin Trust Center or the Massachusetts Institute of Technology.
Have more questions? Submit a request


Powered by Zendesk