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【V+ Perspective】Not Every Business Is Venture-Backable: The Difference Between a Business Owner and an Entrepreneur
- 1 hour ago
- 4 min read
As a venture capitalist, one of the most common misconceptions I encounter is the assumption that starting a business automatically makes it a venture capital opportunity.
After all, venture capital has the word “venture” in it. So people naturally ask me:
“My wife and I are quitting our jobs to open a traditional dessert shop. Would you invest in us?”
“I used to run sales at a company in this industry. Now I’m starting a similar business myself. I already know the market—would you invest?”
Some are even more confident:
“I was a senior executive at one of the Magnificent Seven companies in the U.S. I managed 800 people. Now I’m starting my own company. If you don’t invest in me, it’s your loss.”
Put simply, the assumption is:
“I start a business. You invest.”
But venture capital has never been about funding the act of starting a business.
Starting a Business Doesn’t Necessarily Make It Venture-Backable
Opening a breakfast shop is entrepreneurship.
Opening a dessert shop is entrepreneurship.
Starting your own consulting firm, trading company, or software company is entrepreneurship too.
And of course, Jensen Huang founding NVIDIA was also entrepreneurship.
They may all fall under the broad umbrella of “starting a business,” but they are fundamentally different endeavors.
A successful breakfast shop owner deserves tremendous respect. They may wake up at 4 a.m. every day, manage procurement, employees, quality, and cash flow, and earn more than many salaried professionals.
But how many customers can one breakfast shop serve? How many cities can the model expand into? Could it eventually create $100 million, $1 billion, or even more in enterprise value?
Those are the questions venture capital asks.
VCs are not simply asking whether something is a good business. They are asking whether it has the potential to become a sufficiently large company.
The Biggest Difference Is Scale
I tend to make a simple distinction.
Someone who builds a successful breakfast shop is an excellent business owner.
Someone like Jensen Huang, who starts with an idea and builds a company amid immense technological barriers, massive capital requirements, global competition, and extreme uncertainty—ultimately transforming an industry and even the world—is what I would call an entrepreneur.
The difference is not simply the size of the company.
The problems they face are fundamentally different from day one.
The technological barriers may be worlds apart. The addressable markets may differ by several orders of magnitude. Capital requirements may go from a few million to billions or tens of billions. And instead of competing with the breakfast shop down the street, you may be competing against some of the smartest and best-resourced people in the world.
More importantly, an entrepreneur must constantly answer one question:
“If this works, how big can it become?”
That is one of the most important concepts in venture capital: scalability.
Being a Senior Executive at a Large Corporation Doesn’t Necessarily Make You a Great Entrepreneur
Another common misconception is:
“I’ve managed hundreds—or even thousands—of people before, so I must be good at building a startup.”
Not necessarily.
Commanding an aircraft carrier that is already at sea and building a ship from scratch require completely different capabilities.
Senior executives at large corporations typically operate with an established brand, capital, talent, systems, customers, and organizational infrastructure behind them.
When you start a company, none of that exists.
You have to find your first customers from scratch. Recruit your first employees. Find product-market fit. Raise capital when cash is running out. Admit when your direction is wrong. Rebuild the organization when it isn’t working.
That is why I rarely make an investment decision based on someone’s title alone.
Past success is a useful reference point, but never a guarantee.
What matters is this: once you leave behind the resources that enabled your previous success, can you build an entirely new set of resources from scratch?
Venture Capital Is Looking for the Few Who Can Create Outsized Impact
None of this means that business owners are somehow less worthy.
Quite the opposite.
Anyone willing to leave a stable job, take on risk, create jobs, and serve customers deserves respect.
But different forms of capital serve different purposes.
Banks are well suited to supporting businesses with stable cash flows. Personal capital can be ideal for building a profitable business that generates income for decades. Venture capital, by contrast, is designed to accept an extremely high failure rate in pursuit of the small number of companies capable of generating outsized returns, enormous scale, and meaningful impact.
So, not every great company is right for venture capital, and not every great business owner needs venture capital.
What venture capital is truly searching for are exceptional entrepreneurs.
They don’t see a store—they see a market.
They don’t see a product—they see a platform.
They don’t just ask how much money the company can make this year—they ask what the company could change ten years from now.
And the psychological pressure, loneliness, failures, and hardships these entrepreneurs endure are often far greater than outsiders can imagine.
Great companies are rare because building one is extraordinarily difficult.
For a great venture capitalist, the aspiration has never been simply:
“You start a company. I invest.”
It is this:
To find exceptional entrepreneurs, believe in them before others do, and support them with capital, experience, and resources as we work together to turn a seemingly impossible idea into a truly great company.
That, to me, is what venture capital is really about.
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About VENTURE+
VENTURE+ specializes in SaaS and AI investments, offering more than just funding. We provide startups with strategic guidance, corporate partnerships, and capital market planning. We aim to be the "Best Co-Founding Partner" bridging startups, venture capital, and industry leaders in long-term collaboration.
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