“VCs look at business plans only if the numbers are huge.” Tom Perkins
Few Venture Capitalists command more respect than Tom Perkins, the legendary co-Founder of the eponymous firm Kleiner Perkins (KPCB).
Although his later years are fraught with controversies, Perkins undoubtedly remains a seminal figure of Silicon Valley and a central proponent of “entrepreneurial Venture Capital”, adding value by bringing operational expertise.
An MIT engineer and Harvard Business School MBA with a long experience in R&D and the nascent computer industry, Perkins became a VC in the early 1970s.
With early investments in Tandem Computers, Applied Materials, and what remains his most stellar success, Genentech, Perkins secured his spot as a VC Hall of Famer.
In Something Ventured, the 2011 documentary about Venture Capital’s birth in Silicon Valley, Perkins says:
“I don’t know how to write a business plan, but I know how to read them. You start at the back, and if the numbers are big, we look at the front.”
This sentence perfectly sums up Venture Capitalists’ obsession with immense market opportunities. As fellow legendary VC Don Valentine (who founded Sequoia Capital the same year as KPCB) clarifies, you need large markets to build large companies.
Over time, startup Founders have learned to put the Market page earlier in their pitch decks.
You need to “buy” the VC’s attention by quickly demonstrating you tick the boxes for an investment.
🗣 Do startups go after large markets or create one? Do you agree with VCs that a large market opportunity is a critical ingredient of success?
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