Friday 14 June 2013

A new source of startup funding coming soon?

The opportunities for funding in the startup ecosystem have progressed rapidly in the last few years, with sources of funds going through multiple iterations, with the advent of new models, such as incubators, co-working spaces, accelerators, seed-funders, bank-backed capital funds and crowd sourcing to longer-standing angel investor groups & venture capital funds.

Each group has their defined space, but something still appears to be missing.

From my exposure to other 'ideas' people, I believe that only around 1 in 5 ideas every go on to get formally pitched as a fully-formed startup.

As a well known VC recently told me, in his 25 year career of listening to pitches (around 5000 fully formed proposals), only around 1% of those ever got backed. And from other sources, we know that only 8-10% of those ever go on to become significant businesses.

So if you follow the math (hazy as it is) for every idea that works, there is potentially 4999 others that didn't.

That's a hell of a lot of value/job creation/ GDP growth etc left on the table.

There are many talked-about reasons for this, including product/market fit, access to resources, funding, temperament, resilience and a plethora of other startup buzz-words that I've left off.

As governments around the world (including Australia) start to review existing legislation around equity ownership, investing & crowd-sourcing, that space is likely see a variety of new hybrid models also coming to the fore.

But I'm not sure that even these measures are necessarily the answers to the problem, in comparison to the pre-existing resources available right now, today.

What seems to have lagged to date is the ability of the corporate world to invest its considerable resources.

I believe that new wave of change is coming, but not in the way that you might expect.

In the distance, I see a new wave of change coming from the foresight of existing & upcoming leaders, which will revolutionise the startup landscape.

Can you see it too?

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