(I'm going to wait a few more days before updating results of my Twitter Experiment, because data is still changing and I'd like to let a little more time pass.  In addition to updating results, I'll let you know on this blog what I plan to do next with my Twitter feed.  As always, let me know by email if you have questions about anything you're reading here, will@alumnifidelity.com.)

I had a discussion recently with a friend who is planning a company that he expects ultimately will be a strong venture capital play.  We talked about the difference between three things that are relevant to companies that want venture capital: (1) proof of concept, (2) viability and (3) fundability.

Essentially, proof of concept means that your idea has at least one buyer, and the buyer is getting some measure of satisfaction from your product.  This is different from viability, which means that your company is on its way to self-sustaining revenues.  And both are distinct from fundability, which means your business has the potential to fundamentally change the lives of a large number of people (and would provide a 10x return on a BIG cash investment).  

In a crummy economy, unless you have a track record as an exec who has managed/scaled a successful company, more and more VCs want to see your company producing self-sustaining revenues.  This shows them that you're capable of implementing, not just imagining.  In other words, the 1990s is two decades behind us, and the fact that a good idea with a little market interest was enough to get VCs to open their wallets in 1999 is irrelevant.  In 2010 you need to do everything short of scale it to get interest from pro investors.  

Is any of this a bad thing?  Not at all.  But if you start a startup today, you should know that the seas won't part after you demonstrate proof of concept or viability, but without those two benchmarks you won't be able to make the case that you're fundable either.  If you want an interesting take on this theme, check out a great post by Bill Burnham over at Burnham's Beat

Will Marlow co-founded AlumniFidelity to help his clients reposition their fundraising to benefit from Web2.0 technology and marketing techniques. He’s working with clients such as UVA, the College of William & Mary, the University of Oklahoma, Bowling Green State University, Randolph Macon College, and he loves nothing better than a thorny marketing challenge.  Email him at will@alumnifidelity.com.