3 ms·

VC is really only applicable to a small subset of possible successful business. It is actually poisonous to businesses that will succeed financially but with r

VC is really only applicable to a small subset of possible successful business. It is actually poisonous to businesses that will succeed financially but with rates of return less than 10x in a relatively short time scale. So, for what VC is doing in the market I think it is fine for a handful of people that can absorb the necessary risk make those decisions and the bets. But there is a huge gulf between those types of new business investments an d smaller risk(both in size of capital needed for the experiment and unknowns)/smaller reward investments. That fat middle is where smaller investors or crowdfunding could really come into their own.

soup10 9y ago
part of the problem is VC has developed a doctrine that is designed for investors, not companies. VCs should be focused on serving their companies, not their benefactors. But in todays world its just not the case. You hear founders talk about burning money and rocket ships and high-risk and danger because of this perverse set of incentives. A revolutionary change is needed to put power back in the hands of companies where it belongs. Companies that are changing the world need to be run by patient careful men, not unstable kids with a dangerous appetite for risk.
- pge 9y ago
  Putting "power back in the hands if companies where it belongs" requires no change at all. Just don't take VC money. It's that simple. Most companies are not best served by raising money from VC firms (and I say this as someone that has been an institutional VC for almost 20 years). But if your take on a business model that requires capital, the expectations of return of those investors are going to be commensurate with the risk. As soon as you raise outside capital whether from a VC or borrowed from your local bank, you have committed yourself to new obligations that will put constraints on how you run the business. Those constraints can be explicit ("pay us X interest every month") or implicit ("the risk associated with the startups we invest in is so great that we have to swing for the fences with every investment, so we are going to push you to a billion or bust strategy."). It is important to understand them before you take outside capital (topic for a longer post...). But if you want to stay in control, it's always best just not to take any outside capital at all.
  - soup10 9y ago
    This isn't realistic. Many business need outside capital, they just need it without the institutional baggage. For my own business i'm specifically looking for investors that are aligned with the companies goals first. And its proving difficult because so many investors have distorted ideas about the very nature of business. Many believe the point of business is to make money. Which is exactly the wrong mindset from my point of view and highly dangerous to what we are trying to accomplish.

soup10 9y ago

part of the problem is VC has developed a doctrine that is designed for investors, not companies. VCs should be focused on serving their companies, not their benefactors. But in todays world its just not the case. You hear founders talk about burning money and rocket ships and high-risk and danger because of this perverse set of incentives. A revolutionary change is needed to put power back in the hands of companies where it belongs. Companies that are changing the world need to be run by patient careful men, not unstable kids with a dangerous appetite for risk.

pge 9y ago
Putting "power back in the hands if companies where it belongs" requires no change at all. Just don't take VC money. It's that simple. Most companies are not best served by raising money from VC firms (and I say this as someone that has been an institutional VC for almost 20 years). But if your take on a business model that requires capital, the expectations of return of those investors are going to be commensurate with the risk. As soon as you raise outside capital whether from a VC or borrowed from your local bank, you have committed yourself to new obligations that will put constraints on how you run the business. Those constraints can be explicit ("pay us X interest every month") or implicit ("the risk associated with the startups we invest in is so great that we have to swing for the fences with every investment, so we are going to push you to a billion or bust strategy."). It is important to understand them before you take outside capital (topic for a longer post...). But if you want to stay in control, it's always best just not to take any outside capital at all.
- soup10 9y ago
  This isn't realistic. Many business need outside capital, they just need it without the institutional baggage. For my own business i'm specifically looking for investors that are aligned with the companies goals first. And its proving difficult because so many investors have distorted ideas about the very nature of business. Many believe the point of business is to make money. Which is exactly the wrong mindset from my point of view and highly dangerous to what we are trying to accomplish.