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Relevant bits from the article: As venture capitalists became more discerning, investment in U.S. tech startups plummeted by 30% in 2016 from a year earlier.
by uiri 10y ago
Relevant bits from the article:
As venture capitalists became more discerning, investment in U.S. tech startups plummeted by 30% in 2016 from a year earlier.
But: Investment in 2016 is still higher than any year from 2002-2013.
“There are companies that everybody wants to invest in and there are a large set of companies that almost nobody wants to invest in,” said venture capitalist Keith Rabois of Khosla Ventures.
But: isn't this always the case?
“There’s going to be a shakeout” for companies that can’t show a profit, said James Beriker, the chief executive of meal-delivery service Munchery.
Well, eventually a business needs to show revenue and a path to profit. Otherwise the music stops and the equity has no value.
Beepi guaranteed sellers a price, and if it couldn’t find a buyer in 30 days, it purchased the car. Beepi marked up the price and pocketed the difference.
Beepi was whipsawed by cars that sat unsold for a month, and that Beepi therefore had to purchase. Losses on those cars could reach more than $5,000 per high-end car, former employees said.
For all the posters admonishing Beepi for spending so much money so fast: this looks like a legitimately capital intensive business. It also looks like it has unlimited exposure to high expenses related to immobile inventory.
- Boxbot 10y agoThe admonishment is deserved; High capital requirements don't necessarily mean high burn rates, they mean that you'd better be damn sure that you have a viable business model to make returns on all that capital. The "unlimited exposure to high expenses" isn't some nit, it's a fatal flaw in their strategy.
- AndrewKemendo 10y agoAll that does is ensure that only the largest companies, who can eat losses, are the ones that innovate on hard technologies. Some things have no precedent in the market and I sure don't want those companies with out sized power already to be the only ones that can exploit it.
- danderino 10y ago"Beepi guaranteed sellers a price, and if it couldn’t find a buyer in 30 days, it purchased the car. Beepi marked up the price and pocketed the difference. " Wait, am I understanding this correctly? They guaranteed high prices which they were not able to find buyers for, and as a result bought the cars at those high prices? And they immediately offered this service to all users? That seems idiotic for a startup. I would have just tried to make money off charging a small transaction fee while working to see if the business model they were aiming for had any viability.
- coredog64 10y agoWhat is the business model for what you are proposing? Car sales on consignment? That might work for a small number of well off consumers, but most people don't own their cars outright. As such, they are unable or unwilling to continue to make payments on a car they can't use. TBH, it sounds very much like what open door does with housing.
- toomuchtodo 10y agoCarmax does it with millions of cars per year. It's not magic. If you're a market maker, you need volume, capital, and intelligent valuations and pricing of your goods.