Wednesday, July 20, 2022

The Unicorns are Deadly

 Don't worry, I don't literally mean that the unicorns are goring people. 

I mean that a Unicorn Mentality is gumming up the start-up and growth infrastructure.  

I just sat through a great pitch fest where plenty of good company pitches were delivered. These were early stage companies, none of them had more than a million in revenue. The incubator that hosted had been selective and the companies were good, many had good potential to become profitable businesses in the $5M to $100M range.

But, rather than the upbeat exciting atmosphere that there should have been, a few of the VC questions (and these were VCs with interest in early stage companies) framed questions in terms of why doesn't their company have a path to becoming a unicorn. 

I could write this off as being provocative and awkwardly worded but I see enough evidence of a problem that I thought I would comment.

 I think the constant citing of "Where's the Next Unicorn"  is a poor mentality which impedes seeing real value and benefits (and strong IRR risk/return) in companies. The unicorn mentality seems to be sucking a lot of the oxygen out of the room where otherwise, there is a lot of potential. 

I get that the huge funds and especially in growth capital only want to go to bat if there's a chance for a grand slam homerun.  But I think it's dysfunctional for that thinking to appear too often in the earlier stage startup infrastructure.

No comments: