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Who is to say the "legitimate" startup deserves the money in the first place? The way I see it, if you're legitimate you should be at break even, investment is

Who is to say the "legitimate" startup deserves the money in the first place? The way I see it, if you're legitimate you should be at break even, investment isn't to dig a company out of a hole but rather to accelerate growth and development. I remember the Twilio CEO saying on Mixergy that they needed investment because without it they wouldn't have been able to grow/build as fast. They didn't need it to stay alive, but they wouldn't be where they are now without it. If a startup dies because of a lack of capital that's their own fault and they probably didn't have a company worth investing in in the first place.

prodigal_erik 16y ago
Nobody breaks even on day one, it takes time and resources to get there. Why shouldn't any of it come from investors? YC's premise is that there are good potential founders who don't even have enough capital to live on for the first few months.
- jordanmessina 16y ago
  YC isn't the same as VC. I should have been a little more clear in my first comment. It's not like I think angels or incubators that make small investments are making bad investments in these young companies. I went through an incubator with my first company, so I know first hand giving those opportunities is priceless. We're talking about VC funding here. No company goes after VC on day one. All these companies that get millions in series whatever rounds are mature and have some revenue coming in, or at least a plan to turn their userbase into dollars. If a company is mature enough to seek VC funding and also needs that investment to dig themselves out of a hole, then I don't think they're worth investing in. That's all I'm saying, hopefully it makes sense.
- arethuza 16y ago
  "Nobody breaks even on day one" When I co-founded a company we boostrapped by finding a contracting client who we managed to negotiate with so that they would pay us immediately in cash before the end of the month. So for the first few months we still managed to pay our salaries, make a profit and we had no overheads as we were working on the client site. After we had some cash in the bank we got an office and purchased our own kit so we could work off site (the client wasn't bothered as long as the work got done). Eventually we got to the point where we decided to focus on product development and we got VC money and moved to only having product related revenue. So yes, I think we did break even on day one.

prodigal_erik 16y ago

Nobody breaks even on day one, it takes time and resources to get there. Why shouldn't any of it come from investors? YC's premise is that there are good potential founders who don't even have enough capital to live on for the first few months.

jordanmessina 16y ago
YC isn't the same as VC. I should have been a little more clear in my first comment. It's not like I think angels or incubators that make small investments are making bad investments in these young companies. I went through an incubator with my first company, so I know first hand giving those opportunities is priceless. We're talking about VC funding here. No company goes after VC on day one. All these companies that get millions in series whatever rounds are mature and have some revenue coming in, or at least a plan to turn their userbase into dollars. If a company is mature enough to seek VC funding and also needs that investment to dig themselves out of a hole, then I don't think they're worth investing in. That's all I'm saying, hopefully it makes sense.
arethuza 16y ago
"Nobody breaks even on day one" When I co-founded a company we boostrapped by finding a contracting client who we managed to negotiate with so that they would pay us immediately in cash before the end of the month. So for the first few months we still managed to pay our salaries, make a profit and we had no overheads as we were working on the client site. After we had some cash in the bank we got an office and purchased our own kit so we could work off site (the client wasn't bothered as long as the work got done). Eventually we got to the point where we decided to focus on product development and we got VC money and moved to only having product related revenue. So yes, I think we did break even on day one.