Most importantly, VCs finance after Aha – after proof of potential. The “standard” VC model is to seek ventures that have reached Aha, seek control, and try to exit as soon as possible at the highest possible valuation. This model has been called to question recently with the success of Facebook and Lyft where the founders control the ventures.
Few VCs succeed because it is tough to find winners. Entrepreneurs have an advantage in negotiations with VCs after the venture has taken off. The take-off proves their strategy and their leadership. Due to lower risk after Aha, entrepreneurs have more financing options, and can pick the ones that best helps them build their unicorn – be it the top 20 VCs, IPOs, strategic alliances, or internal cash flow.
