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Jeff Pulver wrote about an important point that I completely agree with: sometimes, trying to force founders of a new startup to figure out a business model for their new idea could drain resources and creativity.

When startups are looking for funding, they have to spend a lot of time working on spreadsheets with numbers that likely will never happen and they are the first people who don’t really believe in those numbers. Unfortunately, VCs like to see “numbers” and those are something you need to have before pitching you startup/idea to them.

I believe it’s time to change and VCs should be more and more involved in helping startups to figure out a business model AFTER having given them the money they need to start. I know that it’s not always possible, but I think we need a new breed of Venture Capitals that really understand that investing only in an idea can lead to success as much as investing in a business model.

Jeff says:

While startups should have a clue as to the business they are entering and the markets they plan on serving and /or disrupting, I have learned from experience that forcing a business model on a company too early can have the effect of draining their creative energies. In reality some business models only appear years after the business is established (i.e. Google with Adwords) and sometimes the real business models were never obvious in the beginning. Yes, business models matter. However, in many cases where a startup is doing something “non-traditional” I am someone who believes in letting the entrepreneurs explore their ideas and for them to walk the paths they create. It is only by exploring and stumbling and exploring does one sometimes by accident discover the business they are really in or the real opportunity in front of them.

The example of Google fits very well with this topic and I’m sure that we will see more startups coming up with new business models after two or more years of on field experience, throwing to the trash bin the spreadsheet full of numbers shown to their VCs two years before.

jeff pulver, luca filigheddu, startups, venture capitals