Traditionally start-ups depend on investors for funding. Traditionally, start-ups are milestone driven based on detailed business plans as the execution of the business plan triggers the release of milestone payments by venture capitalists. However, the issue with the traditional milestone driven approach is that it hinders early stage start-ups to pivot when needed. The milestone based VC model conflicts with basic start-up fundamentals such as the ‘fail early principle’ and the continuous focus on testing and adjusting the minimum viable product. As a result, we see that milestone based venture capital financing is primarily being used for high growth ventures in a series A, B or C.
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