Opportunity Network Inc.(ON), New York based networking startup entrepreneur by Brian Pallas, has achieved a valuation of $150 million. Surprisingly, the 28 year old entrepreneur hasn't received a single penny under venture capital. Even more surprising fact is, the startup has been valued for $100 million, just a year back.
The networking site aims to look for partnerships or mergers and acquisitions around the globe. It introduces potential anonymous members meeting its strict financial requirements and seeking for deals of $1 million or more. The business is scheduled to close third round of fundraising this month with investments of $10 million, according to a report published in Brunch News.
Pallas is a strong advocate for keeping fundraising and ownership within a founder's control. He also observes venture capitals (VC) are over rated for both entrepreneurs and investors. Recently, he has narrated benefits for startups avoiding venture capital and secret behind growing of his startup to $150 million without VC funds, in an interview with Forbes.
VC has failed to bring big returns to investors across the board with a very few exceptions for Sequoia, Google Ventures and others. Return for top 10% VCs has been lower compared to that in equity markets. So more money can be generated from an automated index rather than a VC, argues NVS24 quoting Pallas.
Nine out of ten firms have headed for failure with liquidity issue since VC funding provides less security to startups. Pallas has also warned of term sheets weighted towards investors, empowering them to eliminate a founder, influence liquidation and dividends. It may also make important decisions about the company. Furthermore, dividend payments also go to the VC first. Following the rule of 'last money in, first money out', initial investors and entrepreneur receive payment last. This has been represented by Pallas as an encouraging feature for the entrepreneurs to gamble with own startups. ON helps individuals and businesses making high level connections all over the world to establish global partnerships. Its members like banks help in saving vast amount of resources in doing so. The banks earn benefits through offering payment based memberships to clients either on complimentary basis. The memberships may be offered even for a subsidized or extra fee. The introduction facilitated by ON leads towards deals. The deals eventually generate revenue for banks from advisory fees and thus 'win-win situations' are ensured for all.
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