Lifestyle Business

Can we stop lying to founders about something?

I've encountered many folks who say that the world is divided into two types of startups:

• VC-Backed

• and "Lifestyle Businesses"

But here's the thing:

This is a lie.

Here's the truth:

• It's a well-known fact that only 0.5-1% of small businesses are backed by Venture Capital

• The majority of public companies in the US are not VC-Backed businesses

• VCs primarily fund a tiny subset of industries and business models

• Yet, they take up a disproportionate amount of our mind space

Here's why:

VCs benefit from perpetuating the idea that everyone wants funding from them but few can get it.

(It means better dealflow, higher equity stakes, and easier LP money for them)

But:

• It's not the case that most startups seek VC money but can't get it;

• Most startups never consider VC money and don't want it.

Because here's the thing:

VC funding simply is a niche liquidity option that's been optimized for high-risk small businesses.

It can be a perfectly fine funding source for many companies that need to take a big risk.

But it's one of many options.

And

It has a track record of creating huge financial success for a small handful of founders

And incredible financial disappointment for the majority of them.

So, the next time someone asks you if you run a "startup" or a "lifestyle business",

I invite you

To laugh at them.

Enjoyed reading this article? Subscribe to receive more via email here. 

Know a Founder or Entrepreneur who'd love this content? Please share it!