5 ms·

It's a good time to actually be a founder right now. Too many people just want to sit around and write checks. I hope the US creates a sovereign wealth fund. N

by tempsy 7y ago

It's a good time to actually be a founder right now. Too many people just want to sit around and write checks. I hope the US creates a sovereign wealth fund. Not only would it likely make raising money more meritocratic but it would likely make a bunch of the low to mid tier VC firms go away.

hn_throwaway_99 7y ago
> I hope the US creates a sovereign wealth fund. Umm, and where would that "wealth" come from?? The US national debt is over 22 trillion dollars.
- adpirz 7y ago
  In a sense, we do this already in the form of billions in all kinds of grants.
- deleted 7y ago
  [deleted]
- tempsy 7y ago
  The NSF regularly gives grants for no equity https://seedfund.nsf.gov/ https://seedfund.nsf.gov/ You could do something like that, but broaden the requirements to include all tech (not just science or high tech), and take equity. The gov't would also be in a much better position to hire scouts across the country, hence democratizing access to funding.
- maximente 7y ago
  by definition that liability is someone else's asset. it may even be yours: many pension funds seek uber-stable paper among other things to diversify risk.
  - paulddraper 7y ago
    It is someone else's asset. That doesn't change the parent's point about the U.S. government not having money for such a fund. (Nor, do I think should it have such a fund. If the government were to have extra money -- and it doesn't -- the government should lower its taxes.)
    - pedrocr 7y ago
      > Nor, do I think should it have such a fund. If the government were to have extra money -- and it doesn't -- the government should lower its taxes. In the case of Norway's sovereign fund (the biggest I think) there's a very good reason for it to exist. The fund inflows are the result of extracting oil from the ground so from the accounting point of view those are not revenues. They're movements in the balance sheet, converting one asset (oil) into another asset (cash). So they then put that in a fund and spend the returns, funding expenses with actual revenues. If they were to spend the capital they would be funding current expenses from assets. The equivalent in the US would be to every year sell a part of the national parks and use that money for tax breaks.
      - paulddraper 7y ago
        Norway is indeed a semi-socialist country financed by state-owned oil. Regardless of whether you think that's a good or bad thing, it's certainly very far from the U.S. situation. > those are not revenues. They're movements in the balance sheet, converting one asset (oil) into another asset (cash)' Though it doesn't invalidate your point, I do not think it means what you think it means. Revenue: The income generated from sale of goods or services, or any other use of capital or assets
        pedrocr 7y ago
        I'm not saying it's a good or bad thing. I'm just explaining why they've setup a sovereign fund and why reducing taxes instead doesn't always make sense. And the point is that Norway is not funded by the oil directly, they're funded by the investment returns of the oil. They don't touch the principal. I agree the situation is very different from the US. I was just pointing out the parallel wasn't the US starting to raise taxes to setup a fund, the parallel would be selling some other asset the US government already does own. In usual accounting terms revenue has clear rules. If you sell long-term assets for the same value you had on your balance sheet already you record nothing in your income statement. You only record a gain or loss if the sale value is different from the book value, and even that goes straight to the bottom line and is not top-line revenue. Norway's oil is a long-term asset so converting it to cash is not revenue in the normal accounting sense.
- bashallah 7y ago
  Ha, you ascribe national debt to the wealth status of corporations? I hope you’re somewhere you don’t do your own taxes.
- georgeecollins 7y ago
  US households hold $113 trillion dollars in assets, so I wouldn't start passing the cup around. https://www.brookings.edu/blog/up-front/2019/06/25/six-facts-about-wealth-in-the-united-states/ https://www.brookings.edu/blog/up-front/2019/06/25/six-facts...
  - paulddraper 7y ago
    > US households > sovereign wealth fund No one is passing about a cup. A sovereign wealth fund is owned by the state. A private wealth fund is owned by people and corporation; e.g. "households".
- gscott 7y ago
  The interesting thing about the debt is that it costs 8.7% of all Federal outlays now verses 15% of federal outlays in the mid-1990s. Hence probably why Nancy Pelosi a few weeks ago agreed with Donald Trump to get rid of sequestration which was holding the line on Federal spending. https://www.pewresearch.org/fact-tank/2019/07/24/facts-about-the-national-debt/ https://www.pewresearch.org/fact-tank/2019/07/24/facts-about... https://www.forbes.com/sites/markcancian/2019/08/03/goodbye-sequestration-hello-deficits-how-the-budget-deal-sticks-our-children-with-the-bill/#64f3cedc6242 https://www.forbes.com/sites/markcancian/2019/08/03/goodbye-...
- tuesdayrain 7y ago
  > > I hope the US creates a sovereign wealth fund. > Umm, and where would that "wealth" come from?? The US national debt is over 22 trillion dollars. By issuing more debt. Debt isn't always a bad thing, especially when it results in an even larger amount of revenue. That's partially why looking at the 22 trillion debt figure in a vacuum is almost meaningless. Looking at the change over time of the debt/GDP ratio will give you a much fuller picture.
- dragontamer 7y ago
  Same fund that bought GM, Freddy Mac, (etc. etc.) and sold it off for a profit. Now with that being said, I'm against the idea of a US-based sovereign wealth fund. But it wouldn't be unprecedented at all. EDIT: I think I can see a sovereign "strategic initiative", like something to ensure semiconductor dominance, or other forms of technological innovations. But not necessarily for the purpose of making money like a sovereign wealth fund would try to do. USA should definitely fund research and providing infrastructure, and maybe even subsidize a company or two. But I'm not sure if the USA wants to be the owners of many companies in the market.
deleted 7y ago
[deleted]
imtringued 7y ago
>It's a good time to actually be a founder right now. It also means that you need to spend a lot of time obtaining funds because it is not a competitive advantage anymore, it's a requirement.
Agathos 7y ago
Between the Bayh-Dole Act, DARPA, NASA, the NSF Seed fund, and Department of Energy loans (I seem to recall the A123 loan was a political football for a while) doesn't the US already put a lot of money into technology startups? The only difference is, the US government doesn't take equity, and thank goodness for that. Imagine a political appointee on the board of every new technology company.
- wayoutthere 7y ago
  The three letter agencies do in fact place people on the boards and within the executive ranks of the companies the DoD awards contracts to.
vmurthy 7y ago
> It's a good time to actually be a founder right now. Too many people just want to sit around and write checks. I’m uncertain about this. Clearly , not having money is bad but is too much money in the hands of founders really good?

by tempsy 7y ago

hn_throwaway_99 7y ago

> I hope the US creates a sovereign wealth fund. Umm, and where would that "wealth" come from?? The US national debt is over 22 trillion dollars.

adpirz 7y ago
In a sense, we do this already in the form of billions in all kinds of grants.
deleted 7y ago
[deleted]
tempsy 7y ago
The NSF regularly gives grants for no equity https://seedfund.nsf.gov/ https://seedfund.nsf.gov/ You could do something like that, but broaden the requirements to include all tech (not just science or high tech), and take equity. The gov't would also be in a much better position to hire scouts across the country, hence democratizing access to funding.
maximente 7y ago
by definition that liability is someone else's asset. it may even be yours: many pension funds seek uber-stable paper among other things to diversify risk.
- paulddraper 7y ago
  It is someone else's asset. That doesn't change the parent's point about the U.S. government not having money for such a fund. (Nor, do I think should it have such a fund. If the government were to have extra money -- and it doesn't -- the government should lower its taxes.)
  - pedrocr 7y ago
    > Nor, do I think should it have such a fund. If the government were to have extra money -- and it doesn't -- the government should lower its taxes. In the case of Norway's sovereign fund (the biggest I think) there's a very good reason for it to exist. The fund inflows are the result of extracting oil from the ground so from the accounting point of view those are not revenues. They're movements in the balance sheet, converting one asset (oil) into another asset (cash). So they then put that in a fund and spend the returns, funding expenses with actual revenues. If they were to spend the capital they would be funding current expenses from assets. The equivalent in the US would be to every year sell a part of the national parks and use that money for tax breaks.
    - paulddraper 7y ago
      Norway is indeed a semi-socialist country financed by state-owned oil. Regardless of whether you think that's a good or bad thing, it's certainly very far from the U.S. situation. > those are not revenues. They're movements in the balance sheet, converting one asset (oil) into another asset (cash)' Though it doesn't invalidate your point, I do not think it means what you think it means. Revenue: The income generated from sale of goods or services, or any other use of capital or assets
      - pedrocr 7y ago
        I'm not saying it's a good or bad thing. I'm just explaining why they've setup a sovereign fund and why reducing taxes instead doesn't always make sense. And the point is that Norway is not funded by the oil directly, they're funded by the investment returns of the oil. They don't touch the principal. I agree the situation is very different from the US. I was just pointing out the parallel wasn't the US starting to raise taxes to setup a fund, the parallel would be selling some other asset the US government already does own. In usual accounting terms revenue has clear rules. If you sell long-term assets for the same value you had on your balance sheet already you record nothing in your income statement. You only record a gain or loss if the sale value is different from the book value, and even that goes straight to the bottom line and is not top-line revenue. Norway's oil is a long-term asset so converting it to cash is not revenue in the normal accounting sense.
bashallah 7y ago
Ha, you ascribe national debt to the wealth status of corporations? I hope you’re somewhere you don’t do your own taxes.
georgeecollins 7y ago
US households hold $113 trillion dollars in assets, so I wouldn't start passing the cup around. https://www.brookings.edu/blog/up-front/2019/06/25/six-facts-about-wealth-in-the-united-states/ https://www.brookings.edu/blog/up-front/2019/06/25/six-facts...
- paulddraper 7y ago
  > US households > sovereign wealth fund No one is passing about a cup. A sovereign wealth fund is owned by the state. A private wealth fund is owned by people and corporation; e.g. "households".
gscott 7y ago
The interesting thing about the debt is that it costs 8.7% of all Federal outlays now verses 15% of federal outlays in the mid-1990s. Hence probably why Nancy Pelosi a few weeks ago agreed with Donald Trump to get rid of sequestration which was holding the line on Federal spending. https://www.pewresearch.org/fact-tank/2019/07/24/facts-about-the-national-debt/ https://www.pewresearch.org/fact-tank/2019/07/24/facts-about... https://www.forbes.com/sites/markcancian/2019/08/03/goodbye-sequestration-hello-deficits-how-the-budget-deal-sticks-our-children-with-the-bill/#64f3cedc6242 https://www.forbes.com/sites/markcancian/2019/08/03/goodbye-...
tuesdayrain 7y ago
> > I hope the US creates a sovereign wealth fund. > Umm, and where would that "wealth" come from?? The US national debt is over 22 trillion dollars. By issuing more debt. Debt isn't always a bad thing, especially when it results in an even larger amount of revenue. That's partially why looking at the 22 trillion debt figure in a vacuum is almost meaningless. Looking at the change over time of the debt/GDP ratio will give you a much fuller picture.
dragontamer 7y ago
Same fund that bought GM, Freddy Mac, (etc. etc.) and sold it off for a profit. Now with that being said, I'm against the idea of a US-based sovereign wealth fund. But it wouldn't be unprecedented at all. EDIT: I think I can see a sovereign "strategic initiative", like something to ensure semiconductor dominance, or other forms of technological innovations. But not necessarily for the purpose of making money like a sovereign wealth fund would try to do. USA should definitely fund research and providing infrastructure, and maybe even subsidize a company or two. But I'm not sure if the USA wants to be the owners of many companies in the market.

deleted 7y ago

[deleted]

imtringued 7y ago

>It's a good time to actually be a founder right now. It also means that you need to spend a lot of time obtaining funds because it is not a competitive advantage anymore, it's a requirement.

Agathos 7y ago

Between the Bayh-Dole Act, DARPA, NASA, the NSF Seed fund, and Department of Energy loans (I seem to recall the A123 loan was a political football for a while) doesn't the US already put a lot of money into technology startups? The only difference is, the US government doesn't take equity, and thank goodness for that. Imagine a political appointee on the board of every new technology company.

wayoutthere 7y ago
The three letter agencies do in fact place people on the boards and within the executive ranks of the companies the DoD awards contracts to.

vmurthy 7y ago

> It's a good time to actually be a founder right now. Too many people just want to sit around and write checks. I’m uncertain about this. Clearly , not having money is bad but is too much money in the hands of founders really good?