Would You Have Funded Zuckerberg?
So, here’s a question … if Mark Zuckerberg came to you with a powerpoint explaining his vision for Facebook, would you have funded his seed round?
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Yes!
Zuck at Facebook !!!
No.
Facebook wasn’t funded b/c of the idea…..it was funded b/c of its hypergrowth and momentum.
Zuckerberg proved an idea with traction - then the money came.
More entrepreneurs should follow this model.
Forget the funding…..build a business (or massive traction if you are a consumer company) and the funding will take care of itself. By the time you need to funding (like Zuckerberg) the entrepreneur can decide whether or not they really need/want it or not.
I agree with Isaac Garcia.
It’s not the idea alone but the execution that proves a startup venture.
Not really, he was an unproven founder. Standard VC questions he would not have been able to answer at seed round(before traction)
1. What’s so unique in this idea(looks like geocities to me ..:-))
2. Where is the IP?
3. Did you say Advertising? It’s not a proven business model for online social networks ..
the question is, do vc’s exist to latch-on to what is already proven to be succesful or do they exist to invest in an unproven venture that my not be successful.
the former is a banker., the later is a vc. and if i am an entrepreneur, i’d look for a vc when the catalyst i need requires money or connections that i don’t have, pure and simple.
an honest answer to your question by any of the existing vc’s should be a NO. because they haven’t invested in facebook when they could’ve.
yes.
if the idea of platform was his in first place.
he is somehow capable.
he has vision for better social interactivity, yet he continue to develop it.
again… agree on execution matters.
Isaac,
You are placing too little emphasis on funding. I think, the days of quick web 2.0 zero barrier to entry scrappy incremental entrepreneurship are numbered.
To build real technology, defensible solutions takes time, money, resources.
I fully agree with you that for web 2.0 as we have experienced it over the last 3 years, bootstrapping to ramp was the right way to go.
But in the next phase, venture is going to become more challenging. The low hanging fruits are starting to become crowded markets.
I am a big believer in bootstrapping. However, if you try to tackle big ideas that require a “building” period before launch/ramp in users/customers, funding becomes an issue.
We are re-entering that phase again, as web 2.0 will soon dry up and become uninteresting, if it hasn’t already.
What about the entrepreneur who has the idea, but needs money to attract full-time developers to execute? How should they approach funding and what is working with VC’s these days?
This is interesting because the challenge is to think beyond the perceived success of Facebook thus far and their ‘valuation’ at $15b. As a layman having a casual conversation, the instinctive answer is to say yes and then ratify that with a deluge of metrics and expert opinions available.
However, being a web startup founder in a growing market such as India, I find myself in the position that Sramana talks about. The whole 48-hour hackathon and leave-it-till-the-money-rolls-in time is over. There are many extreme niche plays out there, which do exclusively one thing, which are useful for a small bunch of people. But anything that solves a bigger problem or simplifies an otherwise complex issue across platforms has a definitive resource requirement. You need to be able to prototype your idea and with some measurable results to justify structured financing.
Albeit, it is true that there are seed investors out there who are looking for buzzwords and unrealistically quick exit strategies that might be able to get you off the ground. I believe that in the long run that they only end up hurting the growth potential of the company.
@Kurt Stoll I think the days of an entrepreneur who has ideas but does not have the developers and still succeeds are over because those very same developers have access to those same ideas in today’s very connected world. Anybody who has good ideas needs to team up or go to work for/with those developers. Without some technical talent of your own, it is going to be very hard to succeed in a major way… and for those who have been able to succeed, I would not underestimate the luck factor: there’s a lot of talented people in this world and for every success that Facebook has enjoyed, I think a lot of it has got to do with luck and timing…