I’m sure you’ve all heard folks say “that’s not a venture backable business.” But what does it actually mean to be “venture-backable”? (1/)

First, it’s important to understand the venture capital business model. VC is an incredible thing. Someone is willing to give you MILLIONS of $ to build your dreams and if you can’t pay it back, no one is going to come take your house and possessions. That’s freaking awesome (2)

The reality is, ~90% of startups fail, and ~75% of venture backed startups fail. How are VCs able to make money, when they have to write off so many investments? (3)

The answer while most of the checks will go to 0, occasionally, one will be wildly successful and return the initial investment thousands of times over and cover all the losses. (4)

It’s impossible to know for certain which ones will be “fund returners” at the onset, but every investment has to have the potential. (5)

The potential is what it means to be a “venture backable” business. That’s why VCs care so much about market size, gross margins, moats, because those are characteristics of high valuable businesses. That’s why the founder’s ambition and vision are so important in the pitch (6)

When a VC passes, they may not necessarily think you have a bad business, but they may not feel it fits their own business model. (7)

And VC funding isn’t right for every business. There are many great businesses out there with predictable revenue, cash flow, but don’t have that crazy outcome profile. In those cases, a traditional loan/line of credit is a much cheaper option to fuel growth (fin)