1M/1M founder on Delaware deal: Most companies ‘won’t be venture fundable’

Earlier this month, the Delaware Department of Economic Development partnered with online-based Silicon Valley incubator One Million by One Million (1M/1M) in a deal that brings 10 early-stage Delaware startups together with mentors and investors from the Bay Area.
Almost a week later, 1M/1M founder Sramana Mitra posted an op-ed on LinkedIn Pulse titled “State Of The Entrepreneurship Union: The Disease Has Become An Epidemic,” in which she shines some light on the Delaware deal and some of the media hype surrounding it.
Mitra’s concern is Delaware media (and subsequently its entrepreneurs) are drinking from the same venture capital-obsessed cesspool as the rest of the world. In doing so, Mitra said Delaware media (she’s looking at you, News Journal) has completely misunderstood the point of entrepreneurship.
Delaware shouldn’t be concerned about losing its startups to Silicon Valley, she said. Why? Because by feeding into “Unicorn hype and the venture capital buzz,” Delaware has become all too concerned about where capital is coming from and how much is accessible, and not nearly as concerned about what she said are the three fundamentals of any business — customers, revenues and profits.

Ken Anderson, Director of the program, asked me during the evaluation, a simple question: “What happens if our companies move to Silicon Valley?” My answer to him was that the only reason it would make sense for a Delaware-origin company to move to Silicon Valley is if they seek funding from Silicon Valley investors, and the investors require that they move. The truth is, most of the companies won’t be venture fundable, and they would most likely be building fundamentally solid businesses with customers, revenues, and profits right in Delaware without any need to move.

The statement about how most Delaware startups in the program won’t be venture fundable is not a slight against Delaware startups — Mitra said 99 percent of businesses that seek venture financing just aren’t the right fit. For that reason — and if only for that reason — Delaware should not be concerned about losing its startups.
The confusion over access to venture capital, she said, is continuing to inflating the bubble. Before that bubble bursts, entrepreneurs need to realize they can build scalable and sustainable businesses without venture funding.