Here’s What Will Come After the Era of Unicorns (According to 8 Venture Capitalists)

By Gabe Weisert May 11, 2016

Prominent VCs weigh in on what the future tech landscape looks like.

Startups that mostly sell to other startups will run into problems.

This is the time period when businesses really need to know who their customers are. There may be some companies where the unit economics work well for a certain customer base — maybe the monthly subscribers or those who live in only dense urban environments.

Those companies need to evaluate whether there is enough of a customer base for them to build a sustainable business, even if it means taking a down round to support it.

Others, though, may find that the economics of the business don’t work regardless of how many ways you try to slice the customer base.

If startups identify that most of their customers are just other startups, then that could be a big problem if their revenue goes poof alongside the startup’s collapse.

‘Within our portfolio, we’ve had discussions with all of our founders and CEOs about what percentage of your revenue is coming from companies that are venture-backed. If that’s a high number what are you doing to change that? That may even be an issue for Facebook. There was a lot of discussion in Q4 that their top advertiser was Wish.’ —Anonymous

‘There are good businesses that have SMBs [small and medium-size businesses], startups as customers, that are recurring revenue businesses that are must-haves for those companies. You can’t just get rid of payroll system or your HR function to cut costs. We very much prioritize companies, if they are selling into startups, whether they’re core, they’re must-haves, they’re daily habits and behaviors, versus things that might be just nice-to-haves.’ —Nikhil Basu Trivedi, Shasta Ventures”

Read the full article at: www.inc.com

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