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YC funds startup with great growth potential; companies that can "scale" well. Service companies scale linearly, and require you to hire additional personnel to

YC funds startup with great growth potential; companies that can "scale" well. Service companies scale linearly, and require you to hire additional personnel to grow, whereas product companies scale exponentially compared to personnel. So my guess is YC will not fund a service company.

khurrams 18y ago
This is right analysis. However, ROI might be lesser but risk of failture would be lesser as well ? But, there is chance that we *"might" become a brand for IPhone apps development. If you can build reuseable libraries, then i beleive you can scale faster ?
- pg 18y ago
  Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.
  - khurrams 18y ago
    I agree !
  - Retric 18y ago
    It's not that they like risk the are just more willing to invest at high risk than most people. Would you drop 10 Million for a 1 in 500 chance of 10 Billion dollars? It's a good bet bet but it can take a while before your first hit.
    - motoko 18y ago
      Would I spend 1e7 make an investment with an expected value of 1e9*(1/.5e3) = 2e6?
      - motoko 18y ago
        Hm, on closer inspection, I would for 10 billion and an average 2x return. I sure that wish I could delete both these comments.
  - DabAsteroid 18y ago
    Venture investors are not looking for things with a low risk of failure. Doug Richard (of BBC's Dragons' Den) says the same thing, here (starts at 4:10 of 6:57; moneyline at 5:30): http://www.youtube.com/watch?v=Z71dl3lZdvU http://www.youtube.com/watch?v=Z71dl3lZdvU You have to understand how investment works. The reason it [the risk-focused pitch] works well is because if there is no risk, there cannot be commensurate reward. I'll repeat it. If there is no risk, there can't be reward. If it's not a risky opportunity, then there's no reward of equal dimension. If you come to me and say, "I've got a risk-free investment," the first thing I know is, there's not much money to be made. There's no free lunch in this world.

khurrams 18y ago

This is right analysis. However, ROI might be lesser but risk of failture would be lesser as well ? But, there is chance that we *"might" become a brand for IPhone apps development. If you can build reuseable libraries, then i beleive you can scale faster ?

pg 18y ago
Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.
- khurrams 18y ago
  I agree !
- Retric 18y ago
  It's not that they like risk the are just more willing to invest at high risk than most people. Would you drop 10 Million for a 1 in 500 chance of 10 Billion dollars? It's a good bet bet but it can take a while before your first hit.
  - motoko 18y ago
    Would I spend 1e7 make an investment with an expected value of 1e9*(1/.5e3) = 2e6?
    - motoko 18y ago
      Hm, on closer inspection, I would for 10 billion and an average 2x return. I sure that wish I could delete both these comments.
- DabAsteroid 18y ago
  Venture investors are not looking for things with a low risk of failure. Doug Richard (of BBC's Dragons' Den) says the same thing, here (starts at 4:10 of 6:57; moneyline at 5:30): http://www.youtube.com/watch?v=Z71dl3lZdvU http://www.youtube.com/watch?v=Z71dl3lZdvU You have to understand how investment works. The reason it [the risk-focused pitch] works well is because if there is no risk, there cannot be commensurate reward. I'll repeat it. If there is no risk, there can't be reward. If it's not a risky opportunity, then there's no reward of equal dimension. If you come to me and say, "I've got a risk-free investment," the first thing I know is, there's not much money to be made. There's no free lunch in this world.