Taver emphasizes the importance of a clear definition for startups, as the current broad usage of the term can lead to confusion and unrealistic expectations among founders, investors, analysts, and journalists. He argues that labeling stable companies with large valuations as startups can limit opportunities for genuine startups that need financing to bring their innovative ideas to life. He also points out that the term "investments in startups" can be interpreted in various ways, complicating the selection process for limited partners.
Key takeaways:
- Mikhail Taver, founder and managing partner of Taver Capital, discusses the definition of a startup, suggesting that a company ceases to be a startup when it no longer relies on external investments for its basic development processes.
- He refers to the 50-100-500 rule proposed by Alex Wilhelm, editor-in-chief of TechCrunch, which states that a company cannot be considered a startup if it generates revenue that exceeds $50 million, employs more than 100 people, and has a valuation of $500 million or more.
- Taver argues that a company that is past its break-even point and is generating revenue, or is able to acquire other companies, is no longer a startup.
- He emphasizes the importance of clear definitions, arguing that labeling all companies as startups complicates the lives of founders, investors, analytics, and journalists, and can lead to higher market expectations and fewer opportunities for real startups.