Posts

Showing posts from April, 2009

Startup 101: Capital efficiency

Image
You may have read in BusinessWeek or TechCrunch when iWidgets closed an A round in January, despite the tough economic climate. In addition to having a strong product that solves a big headache for content publishers, a big part of why we got funded is our capital efficiency.

iWidgets spent only $1.5M in 18 months to bring our iWidgets platform to market, launch it with a major customer (CBS), and then sign three more customers.

Our leading competitor spent $10M in the same amount of time, just laid off a large portion of their staff, have no business model, and a product that solves yesterday's problem.

While you can’t build a business without a plan, capital efficiency is the often-overlooked key ingredient for a successful startup. Capital efficiency isn’t just about not wasting money, it’s also about not having any fat. Too often, bloated, fatty companies are insulated from market realities — you can’t feel it when the road starts to get rough. So it is not just in this econom…