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http://www.paulgraham.com/divergence.html http://www.paulgraham.com/divergence.html VC funding will probably dry up somewhat during the present recession, like
by sillysaurus3 9y ago
http://www.paulgraham.com/divergence.html http://www.paulgraham.com/divergence.html
VC funding will probably dry up somewhat during the present recession, like it usually does in bad times. But this time the result may be different. This time the number of new startups may not decrease. And that could be dangerous for VCs.
When VC funding dried up after the Internet Bubble, startups dried up too. There were not a lot of new startups being founded in 2003. But startups aren't tied to VC the way they were 10 years ago. It's now possible for VCs and startups to diverge. And if they do, they may not reconverge once the economy gets better.
This logic works in reverse, too: if funding becomes dramatically easier thanks to ICOs, startups have no reason to court VCs anymore. And that could be dangerous for VCs.
- tptacek 9y agoWho cares about the VCs? VCs are an insignificant component of the financial system. I don't agree that ICOs would be harmful to VCs, but even if they were: the larger financial system would profit enormously from retail investment in fly-by-night startups.
- sillysaurus3 9y agoThis subthread was about class barriers and investors. You expressed ICOs might not be harmful to them, so I mentioned a way they might be. Not sure where the financial sector topic came from. What exactly would the problem be with letting people crowdfund startups (i.e. equity)? Why not follow Filecoin's lead? I've been reading your arguments and you haven't really articulated your concerns; just persuasive cases that the status quo should be maintained. The next Google/FB/Netflix might very well start using the model here, if you let it. But only if they have access to capital. And right now, that means VCs.
- tptacek 9y agoAgain: you're suggesting that when we talk about the interests of rich financiers, we're talking about the VCs. I'm sure not. If there's a financial power center to be concerned about, it's Goldman Sachs, not Sequoia. The fact that ICOs might somehow impact some tiny corner of the finance industry doesn't matter if it's going to juice things for the giant investment banks.
- jakelazaroff 9y agoWhy would ICOs make startups less reliant on VCs, other than the fact that (for the time being) ICOs let startups skirt investment regulations they'd otherwise have to adhere to? I agree with tptacek's general thesis here: there's not any inherent difference between ICOs and "normal" early-stage investing that justifies an utter lack of regulation of the former but not the latter.