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The main reason I bootstrapped my, now defunct, attempted start-up. I didn't want a boss, so why would I take on something even worse, an investor? I wanted to
by hef19898 3y ago
The main reason I bootstrapped my, now defunct, attempted start-up. I didn't want a boss, so why would I take on something even worse, an investor? I wanted to be able to settle for a profitable boutique kind of thing, only a small number of investors would be fine with that and I had neither money nor time in finding those.
You nailed it with your last sentence, VC nacked companies can simply out spend competitors, upsetting markets by virtue of having, or rather having had, endless money. And then some still go bust. And there is a complete generation of people thinking that is just normal, a good thing even, and see funding as a success for a company. Hopefully that changes now, but we'll see I guess.
- jacquesm 3y agoI do tech DD and get to see the other side of the table as well, which can be pretty interesting. Some VCs are cautious and spend wisely, others are reckless and will throw money away in the hope of a jackpot. I've seen business cases that were so broken they essentially amounted to VC subsidized re-sale of luxury goods and yet nobody thought twice about it. I think I understand the rationale behind about the 50% or so of the deals that I see. But - and this is where it gets really interesting - I've been wrong on a low number of occasions too (from the investors perspective, they made out like bandits) and there is a pattern here: VCs don't necessarily need for the company to work out long term, they just need for it to work out until they sell their shares. This is known as the 'bigger fool' theory and you have to wonder how many of the 50% of the deals remaining falls into that category. Finally: some VCs have a model that drives them to do this, they get paid over 'funds under management', and whether or not that eventually works out or not doesn't matter all that much, they get paid in the meantime. It will ultimately affect their ability to launch new funds but by then they usually have three funds in flight due to the delay between launching the first fund and the problems in the investments catching up with them, companies with money to burn can take a long time to fail.
- hef19898 3y agoI always thought that finding the "bigger fool" is annactual VC strategy, simply because it explains so much! YC play this really well, don't they? Getting in very early, having a lot of clout, making it easy for their portfolio companies to find invetstors, spreading their bets far and wide. Coming back to Softbank, they seem to be one of those "even bigger fools", short of a SPAC / ICO, don't they? All in all, I realized I am quite happy doing a specialized job at big corp, not having to worry (I'm still interested, but is doesn't directly affect me anymore) about those things. Edit: Always a pleasure running into discussions with you!