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How much of this is "dumb" money? A lot has been written on how well folks are doing fundraising, but not so much on what types of investors are willing to thro
by jwwest 15y ago
How much of this is "dumb" money? A lot has been written on how well folks are doing fundraising, but not so much on what types of investors are willing to throw money on the basis of a 2 1/2 minute pitch just because it has Y Combinator attached.
Investments are much more than just money (duh), you're also gaining an ally and potential business mentor. If I were to be offered 500k from an extremely smart person who has shown personal interest in my product versus 2mil from someone trying to play "startup darts", I'd take the 500k and work my ass off.
It scares me how much money is being thrown at name dropping these days.
- negamax 15y agoI know it feels like another extreme to the problem of raising money. That's why the post title, I guess. Hopefully, we will strike a middle ground before things get shaken.
- ajross 15y agoI'm not sure that's the right metric for "dumb" money. Say, as a gedankenexperiment, that you're a very bright, very successful person interested for whatever reason in investing in a tech startup. But you don't know technology. Do you (A) spend hours trying to understand the technology before carefully investing your cash or (B) hop on the coat tails of a proven winner? That said: this has all the smell of Yet Another F'ing Bubble. PG and company should be very careful not to let this get out of hand. A big high profile wreck or two (YC-funded startup that takes 20M and bombs inside two years, say) would destroy the brand they've created.
- pg 15y agoinvestors are willing to throw money on the basis of a 2 1/2 minute pitch just because it has Y Combinator attached I wish we could claim that. But YC's brand is not that powerful. There are still startups that present at Demo Day and aren't able to raise money.
- cperciva 15y agoDo you have any sense of how much this is a function of the demo and how much it's a function of the idea? Or put another way: At the start of the YC program, do you have any sense of which teams will have trouble raising further funding, or does that wait until they've spent a few months writing code?
- pg 15y agoSometimes we can predict which companies will have trouble raising money, but it depends a lot on what happens during the 3 months. E.g. a pair of very nerdy founders will ordinarily have trouble raising money, but if they can make a graph rise steeply that problem tends to go away.
- cperciva 15y agoOk, so it's more often a function of the founders than it is you saying "this idea seems like one which will be really hard to sell"?