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Disrupt VC model, says Draper Startup House exec

We need to reexamine the current VC model, according to Giulianna Crivello, Head of Ventures, International, at Draper Startup House.
We need to reexamine the current VC model and mix things up, according to Giulianna Crivello, Head of Ventures, International, at Draper Startup House.

Why should geography limit venture capital? In the current VC model, where most platforms are local or regional, startups find it difficult to raise capital from an investor outside their borders.

This is precisely why Singapore-based Draper Startup House has launched its own funding platformDraper Startup House Ventures. And why it is committed to disrupting the current VC model in order to match startups and investors from all across the globe.

Leveling the playing field

“That’s what we’re going to do. We’re going to mix things up. And at the same time, a lot of our partners indicated that they were interested in investing across borders. But they didn’t have the clarity. They didn’t have the oversight. And didn’t have the expertise. So along those lines if we can help connect entrepreneurs with the capital, then I think that would be a pretty cool thing to do,” said Giulianna Crivello, Head of Ventures, International, at Draper Startup House.

Crivello was the speaker at a webinar that Draper Startup House conducted. She shared that in four to six weeks, they put together the partnerships and launched the funding platform.

According to Crivello, the problem with the current VC model is that sometimes connections determine access to capital. This is why entrepreneurs spend so much time in networking events. Because of this, however, a startup is unfortunately constrained by geography.

“An entrepreneur in Chiang Mai who doesn’t have access to global tools or network or has never done this before has substantially less opportunity than somebody who’s on their third company,” Crivello said.

She said what Draper Startup House is trying to do is to provide better access for entrepreneurs.

She also noted that having a presence in nine physical locations means they have satellites of these global networks combined with local insights.

“It’s incredibly important to be able to understand the ecosystem of these fundraising entrepreneurs. Realizing that the Manila ecosystem is vastly different from the United States. And to be able to support these entrepreneurs in fundraising in general,” Crivello said.

Burning through cash

How about the problem startups face when they prioritize growth, burning through their cash instead of generating revenue? And then they hope for the next round of funding to bail them out. Does Crivello see this practice continuing in the post-pandemic world?

“This is a deeper problem also. I think that burning cash instead of generating revenue in the hopes of quick growth and scaling is a classic startup issue and problem. And I think in the post-pandemic world, I actually think it will still be very relevant. Especially now where startups are raising funds in quick rounds. And they’re starting to see whatever can sort of help bridge them through whatever time frame.

“A large part of the VC and fundraising industry is traction. And for very obvious reasons because VCs are so early and you are betting on whatever little historical data in terms of that hockey stick projection. And I don’t think it’s going to go away. Because in the post-pandemic world, there’s going to be a lot of pressure to perform and to stick around,” Crivello said.

So, are you a startup founder looking for an investor? Thanks to this disruption of the VC model, you can now compete on a more level playing field.

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