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.

 

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