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I've always thought the VC model for software is fundamentally flawed. Software is so easy to get started that if it can't bootstrap from a bare minimum produc

I've always thought the VC model for software is fundamentally flawed. Software is so easy to get started that if it can't bootstrap from a bare minimum product, maybe the idea isn't that great as a business. On top of that, I think there's a bit of circular logic and wishful thinking involved in getting VC money. It encourages companies to spend more money than they need to on things like scaling and fancy design and excessive marketing, because they need to scale to meet VC expectations. The VC model was essential for the hardware oriented companies that pioneered it because they needed a lot of equipment and capital to build chips and computers. There's so little capital cost with software nowadays, I don't know why VC still persists.

abalashov 11y ago
That is definitely not true of all software. Consumer and SMB Web applications, maybe, but domain-specific business software can be a rather nontrivial and capital-intensive undertaking. Those are the quiet companies engaged in the "boring" business of making money that you don't hear about. That said, a lot of the money goes to marketing. Google AdAwords and low-touch web-based marketing doesn't work for all kinds of products; in an esoteric business market niche, the cost of customer acquisition is rather high, as trade shows, conferences and personal connections matter a lot more.