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VC predicts the industry is heading for a massive and enduring contraction

14 points by belter 2y ago

rbultje 2y ago
It still surprises me every day that industry insiders discuss our current-era tech downturn and attribute it to a poor investment environment due to increased interest rates, yet nobody discusses the devastating impact of Section-174.
threesevenths 2y ago
One can only hope that this will scare off the short term mindset and bring in leaders with long term objectives. We don’t need money doubling machines we need solutions to real world problems.
- wahnfrieden 2y ago
  Why would hardships lead to investors chasing social benefit instead of returns?
  - threesevenths 2y ago
    It won’t. The idea is that if the investors are scared off then it will create an environment where entrepreneurs are not driven by their investors objectives and need a solid business plan to secure their initial funding.
  - vinyl7 2y ago
    FOMO vs investing in actually viable/valuable products
zulban 2y ago
The author has an incentive for people to believe his prediction.
- techostritch 2y ago
  Maybe? But this also seems to be in line with a lot of desperation in the industry to have greater control over macro-economic factors.
mordymoop 2y ago
Serious question that sounds like a troll: Given that VC returns are historically extraordinarily poor, should one generally invert the consensus of the VC class when looking for guidance?
- sokoloff 2y ago
  Is that a given? I think that VC has slightly outperformed (or, at a minimum, are not "historically extraordinarily poor" versus) the broader market. https://www.cambridgeassociates.com/insight/building-winning-portfolios-through-private-investments/ https://www.cambridgeassociates.com/insight/building-winning...
- techostritch 2y ago
  Can one invert the consensus of VC? It’s not binary/polar right? I don’t think investing in all VC’s throwaways would be a good investment strategy.
deleted 2y ago
[deleted]
sbarre 2y ago
The bit about investing in iterative startups who just bolt a few new features on an existing idea, or aggregate other existing stuff together without really innovating is interesting... Feels like that was one of the defining characteristics of the VC-backed B2B SaaS era (that is still ongoing)..

14 points by belter 2y ago

It still surprises me every day that industry insiders discuss our current-era tech downturn and attribute it to a poor investment environment due to increased interest rates, yet nobody discusses the devastating impact of Section-174.

threesevenths 2y ago

One can only hope that this will scare off the short term mindset and bring in leaders with long term objectives. We don’t need money doubling machines we need solutions to real world problems.

wahnfrieden 2y ago
Why would hardships lead to investors chasing social benefit instead of returns?
- threesevenths 2y ago
  It won’t. The idea is that if the investors are scared off then it will create an environment where entrepreneurs are not driven by their investors objectives and need a solid business plan to secure their initial funding.
- vinyl7 2y ago
  FOMO vs investing in actually viable/valuable products

zulban 2y ago

The author has an incentive for people to believe his prediction.

techostritch 2y ago
Maybe? But this also seems to be in line with a lot of desperation in the industry to have greater control over macro-economic factors.

mordymoop 2y ago

Serious question that sounds like a troll: Given that VC returns are historically extraordinarily poor, should one generally invert the consensus of the VC class when looking for guidance?

sokoloff 2y ago
Is that a given? I think that VC has slightly outperformed (or, at a minimum, are not "historically extraordinarily poor" versus) the broader market. https://www.cambridgeassociates.com/insight/building-winning-portfolios-through-private-investments/ https://www.cambridgeassociates.com/insight/building-winning...
techostritch 2y ago
Can one invert the consensus of VC? It’s not binary/polar right? I don’t think investing in all VC’s throwaways would be a good investment strategy.

deleted 2y ago

[deleted]

sbarre 2y ago

The bit about investing in iterative startups who just bolt a few new features on an existing idea, or aggregate other existing stuff together without really innovating is interesting... Feels like that was one of the defining characteristics of the VC-backed B2B SaaS era (that is still ongoing)..