3 ms·

If your startup was venture-backed, wouldn't the risk lie on the VCs instead of you?

electic 9y ago
Getting of the ground is key. Before you can raise VC money, you have to have traction. This increasingly includes seed financing as well. So either way, you have to take a huge risk to start a company where the outcome is uncertain. When you run into a founder or work for one in the US, realize the absolute big risk they are taking. People in Sweden have a safety net to catch them. The result is people are more willing to take risks to start something and you also see more innovative startups that would otherwise be considered high risk in the US by founders.
- burntrelish1273 9y ago
  TL;DR - Validation<- ->expansion treadmill.
stevenwoo 9y ago
In the USA, paid health insurance is tied to one's choice of employment, unless one declines the employer's coverage. Whom are you expecting to pay for health insurance if one hypothetically quits working for Google and starts their own one man/woman company? Or is this not factor in as a risk in your opinion?
- em3rgent0rdr 9y ago
  The fact that health insurance is tied to employment in the us is just as much an argument for getting rid of the taxes and other incentives which led to employers being the dominant provider of health insurance.
  - labster 9y ago
    Which will in turn largely get rid of health care benefits for employees. Problem solved!
  - KGIII 9y ago
    Unless I'm not getting what you're saying, they did. Employers, in the US at least, started including health insurance during WWII. Because of the government needing to exert some control on the effective labor force, they government set a maximum amount a company could pay. Because of this, companies needed to find additional benefits, non-monetary, to give to employees, both to keep and attract employees. So, they started to offer medical insurance. Well, it stuck and medical insurance has been tied to employment ever since. But, that incentive has long-since been removed from the books and employers can now happily pay as much as they can afford. As for other incentives, I don't know of any incentives offered to employers that offer insurance, at least until recently. The current incentive is a fine, if they are meet the criteria and don't offer insurance. Other than that, a perverse incentive that does exactly opposite of what you're asking, there is nothing else. I suppose you could be referring to the employer not being taxed on money spent on insuring their employes, but taxes are based on profits and the personnel expenses are not on that side of the ledger. There's no incentive, the money just isn't taxed because we tax profit, not revenue.
- MrFoof 9y ago
  >Whom are you expecting to pay for health insurance if one hypothetically quits working for Google and starts their own one man/woman company? Um, yourself? I have an ACA plan. It handles all the catastrophic stuff, and has a very reasonable deductible. It costs me ~$360/mo. Certainly this is a different ball of wax with a family (figure more around $1100-1400/mo for a reasonable plan) that has dependents. In my case I quit working eons ago. I bought health insurance via a state marketplace (RomneyCare). My total costs (business insurance, legal, marketing) were less than $10K. I was profitable at the end of month two. At the end of year one, even with expenses I was making 70% more than I could as an employee in most companies in Boston (and around what I could theoretically get at Google, if they would even give me the time of day). It's been 5 years, and I still question why I didn't do it earlier. Worst case I had two years of savings in the bank from average-paying software jobs. You don't have to do crazy things that require millions of dollars. I'm working on a "big thing" (to me) now that will require ~3000 hours of development time to launch, but I'm doing it all myself, and my costs are $10-15K and learning some new skills. Though the very real potential is for it to easily replace business one, and put my income well above what even the Valley could ever pay me. I wouldn't of done that quitting a job though -- that's something I would build on the side and launch while still employed, and only quit when it's clear the revenue will cover expenses.
  - bjelkeman-again 9y ago
    An example that demonstrates the difference compared with a place like Sweden is that if you are a pennyless student, you can't afford $360/month. That would make it hard to do a startup and still have health insurance. As a student I would would have 10000 SEK / month ($1200), in grant and student loan. [1] You would expect to need nearly all of that in any of the town Universities [2] leaving nothing for healthcare. But in Sweden healthcare is nearly free (maxed at $120 for a 12 month period). [1] http://www.csn.se/lattlast/studiestod/studiemedel/hur-mycket-kan-du-fa http://www.csn.se/lattlast/studiestod/studiemedel/hur-mycket... [2] https://www.kth.se/blogs/abhineet/2016/05/livingexpense/ https://www.kth.se/blogs/abhineet/2016/05/livingexpense/ [3] https://www.1177.se/Stockholm/Regler-och-rattigheter/Patientavgifter-i-Stockholm/ https://www.1177.se/Stockholm/Regler-och-rattigheter/Patient...
- burntrelish1273 9y ago
  If someone were really hard up, ie became homeless, there is Medicaid. It's free but not nearly as convenient or good as Medicare, which older citizens and disabled get (which has some costs). Medicare for all (single-payer) but with no copays for broke people would be ideal.
NetStrikeForce 9y ago
How do you get VC investment before you have a prototype or a working product? Building those take time. Time which you invest in not working and earning a steady paycheck. Savings are finite, sadly.
burntrelish1273 9y ago
That's conflating different risks. Personal income stream of worker/s (of which founders, angels and investors are also workers) is one thing, capital as fuel for growing a sustainable company from nothing is another.

Getting of the ground is key. Before you can raise VC money, you have to have traction. This increasingly includes seed financing as well. So either way, you have to take a huge risk to start a company where the outcome is uncertain. When you run into a founder or work for one in the US, realize the absolute big risk they are taking. People in Sweden have a safety net to catch them. The result is people are more willing to take risks to start something and you also see more innovative startups that would otherwise be considered high risk in the US by founders.

burntrelish1273 9y ago
TL;DR - Validation<- ->expansion treadmill.

stevenwoo 9y ago

In the USA, paid health insurance is tied to one's choice of employment, unless one declines the employer's coverage. Whom are you expecting to pay for health insurance if one hypothetically quits working for Google and starts their own one man/woman company? Or is this not factor in as a risk in your opinion?

em3rgent0rdr 9y ago
The fact that health insurance is tied to employment in the us is just as much an argument for getting rid of the taxes and other incentives which led to employers being the dominant provider of health insurance.
- labster 9y ago
  Which will in turn largely get rid of health care benefits for employees. Problem solved!
- KGIII 9y ago
  Unless I'm not getting what you're saying, they did. Employers, in the US at least, started including health insurance during WWII. Because of the government needing to exert some control on the effective labor force, they government set a maximum amount a company could pay. Because of this, companies needed to find additional benefits, non-monetary, to give to employees, both to keep and attract employees. So, they started to offer medical insurance. Well, it stuck and medical insurance has been tied to employment ever since. But, that incentive has long-since been removed from the books and employers can now happily pay as much as they can afford. As for other incentives, I don't know of any incentives offered to employers that offer insurance, at least until recently. The current incentive is a fine, if they are meet the criteria and don't offer insurance. Other than that, a perverse incentive that does exactly opposite of what you're asking, there is nothing else. I suppose you could be referring to the employer not being taxed on money spent on insuring their employes, but taxes are based on profits and the personnel expenses are not on that side of the ledger. There's no incentive, the money just isn't taxed because we tax profit, not revenue.
MrFoof 9y ago
>Whom are you expecting to pay for health insurance if one hypothetically quits working for Google and starts their own one man/woman company? Um, yourself? I have an ACA plan. It handles all the catastrophic stuff, and has a very reasonable deductible. It costs me ~$360/mo. Certainly this is a different ball of wax with a family (figure more around $1100-1400/mo for a reasonable plan) that has dependents. In my case I quit working eons ago. I bought health insurance via a state marketplace (RomneyCare). My total costs (business insurance, legal, marketing) were less than $10K. I was profitable at the end of month two. At the end of year one, even with expenses I was making 70% more than I could as an employee in most companies in Boston (and around what I could theoretically get at Google, if they would even give me the time of day). It's been 5 years, and I still question why I didn't do it earlier. Worst case I had two years of savings in the bank from average-paying software jobs. You don't have to do crazy things that require millions of dollars. I'm working on a "big thing" (to me) now that will require ~3000 hours of development time to launch, but I'm doing it all myself, and my costs are $10-15K and learning some new skills. Though the very real potential is for it to easily replace business one, and put my income well above what even the Valley could ever pay me. I wouldn't of done that quitting a job though -- that's something I would build on the side and launch while still employed, and only quit when it's clear the revenue will cover expenses.
- bjelkeman-again 9y ago
  An example that demonstrates the difference compared with a place like Sweden is that if you are a pennyless student, you can't afford $360/month. That would make it hard to do a startup and still have health insurance. As a student I would would have 10000 SEK / month ($1200), in grant and student loan. [1] You would expect to need nearly all of that in any of the town Universities [2] leaving nothing for healthcare. But in Sweden healthcare is nearly free (maxed at $120 for a 12 month period). [1] http://www.csn.se/lattlast/studiestod/studiemedel/hur-mycket-kan-du-fa http://www.csn.se/lattlast/studiestod/studiemedel/hur-mycket... [2] https://www.kth.se/blogs/abhineet/2016/05/livingexpense/ https://www.kth.se/blogs/abhineet/2016/05/livingexpense/ [3] https://www.1177.se/Stockholm/Regler-och-rattigheter/Patientavgifter-i-Stockholm/ https://www.1177.se/Stockholm/Regler-och-rattigheter/Patient...
burntrelish1273 9y ago
If someone were really hard up, ie became homeless, there is Medicaid. It's free but not nearly as convenient or good as Medicare, which older citizens and disabled get (which has some costs). Medicare for all (single-payer) but with no copays for broke people would be ideal.

NetStrikeForce 9y ago

How do you get VC investment before you have a prototype or a working product? Building those take time. Time which you invest in not working and earning a steady paycheck. Savings are finite, sadly.

burntrelish1273 9y ago

That's conflating different risks. Personal income stream of worker/s (of which founders, angels and investors are also workers) is one thing, capital as fuel for growing a sustainable company from nothing is another.