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Memo from Silicon Valley: The Truth About Unicorns

In Silicon Valley-speak, a 'unicorn' is a startup valued at more than $1 billion. They are meant to be rare and elusive - like the mythical one-horned creature. But it seems they are neither. The current count of tech-driven unicorns is 152 and they are collectively worth over a half trillion dollars (on paper).

However, Q4 2015 saw a dramatic drop in venture capital funding these deals. This, together with the predicted drop in VC for 2016, has many people asking, "How many dead unicorns or 'unicorpses' will we see in 2016?"

There's no doubt many unicorns are over-valued and of course there will be failures, but that's expected. This is high-risk investing. But, what I like to look at is how close are any of these companies to having a real business. You know, things like interesting technology solving big problems and attracting paying customers.

These are the type of entrepreneurs I look for. Business builders.

What does all this mean to the early-stage entrepreneur raising their first round of VC? I asked this question of a panel of investors just last week. Their response? "You can always get $3 million."

For someone like me, who works really hard with entrepreneurs for 6 to 12 months to raise an A-round, I found that response flippant at best. But put into context it was encouraging. Yes, VCs are pulling back on mega-deals, but there is an abundance of early-stage capital and that capital is looking for 'real businesses'.

Later this month I'll be talking about this in Sydney and Melbourne. See the box below for details and RSVP. If your business plans are bringing you to Silicon Valley in the near future, be sure to send me an email so we can meet in person. 

Viki Sig
Viki Forrest
CEO, ANZA Technology Network

(Or how to get $3M USD) 
Don't let the tech press stories about unicorns and U.S. venture capital circling their wagons around their funds put you off. There is investment to be had for real businesses - those with interesting technology solving big problems and attracting paying customers. What is the secret sauce to raising early-stage capital for Australian entrepreneurs? It lies in understanding the differences that come from building a business in a small market and raising money to take it to the next level in a big market. Two completely different mindsets. One proven approach that has worked for many ANZA TechNet clients.

  • Wednesday, 24 February, 10:30 a.m.
    Stone & Chalk, Sydney
    RSVP: Limited seats available. Email Viki for invite.
  • Tuesday, 1 March, 12:30 p.m.
    Inspire 9, Melbourne
    RSVP: Email Viki to request a ticket.
  • Friday, 4 March, 3 p.m.
    muru-D, Sydney
    RSVP: Register at EventBrite.

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