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The Onion theory of Risk for Startups

Updated over 5 months ago

The onion was the inspiration for Vai's logo:
Fundraising is like “peeling the onion”: each milestone removes a layer of risk.
By addressing key risks at every stage, Startups can present a clearer, more compelling case to investors.

Why use the onion 🧅 analogy, and what does it have to do with the Startup world, investments, and Vai? It's not about a vegetable, but about risk.

A Startup at its earliest stage is exposed to numerous risks—many things can go wrong (for example: the Startup may discover that the problem they're solving isn't as pressing as initially thought, leading to a lack of interest from potential customers, or a key member leaves or underperforms, so it can severely hinder progress). These risks can be compared to the layers of an onion.

At every stage of a Startup's development, you peel away certain layers of risk by achieving milestones and raising capital to address the next set of risks. You can’t peel the inner layers without first peeling the outer ones. At each stage, investors expect some risks to have already been mitigated, while others remain to be tackled.

Understanding your current stage and the associated risks is critical for successful fundraising. It helps you clearly demonstrate your progress, plan your next steps, explain how you will use the funds, and make an informed decision about how much capital to raise and what kind of investors you want on board.

Vai’s profile creation process is designed to focus on the specific “layer of the onion” that matches your fundraising stage. The goal is to clearly showcase what you've accomplished, which risks you've mitigated, and the milestones you're raising money for next. Once you select your current fundraising stage, Vai customizes the guidance and calculates your Profile Strength to reflect your specific needs.

Discover the inherent risks at each Seed round:

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