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There is a whole spectrum of profitability between not profitable--ramen profitable--yacht profitable. IMO, a startup worth funding needs the money in order to

There is a whole spectrum of profitability between not profitable--ramen profitable--yacht profitable. IMO, a startup worth funding needs the money in order to scale, because what they're doing is working and they need to grow it. If you need operating cash, the cheapest you'll get is a bank loan (if you can get there) or even cash advances on credit cards. Some businesses won't scale or won't scale well, which can be a perfectly fine situation as a 2-5 person startup. If I had a 2-person startup bringing in $500k in profit/year I'd be a happy camper, even if it couldn't scale further than that. I think a lot of founders see investor acceptance as a certain validation to their business, when really it is a classification of their business. Investability isn't perfectly correlated with viability. Consultancies might be the perfect example of this -- they can generate major major cashflow, but you'd never want to be an investor in one. Doesn't mean consultancies are bad businesses, and YC's rejection doesn't mean yours is bad business either.

yesimahuman 14y ago
Great point. I do think the validation is something all new startups search for, and it sucks when you don't get it, but you have to realize there is a strong marketing campaign at work to make you care about stuff like that. We had fairly strong feelings about wanting to bootstrap our company before we applied, and I think not getting in really helped us solidify those values. I will say that many companies that get funded from YC aren't ones that you described. Many have no users or even a launched product, just a big vision in a target market. There's nothing wrong with that, but I just wanted to point out that there is a difference between an unlaunched company getting seed funding and one that wants to execute on an opportunity and could really utilize capital.

yesimahuman 14y ago

Great point. I do think the validation is something all new startups search for, and it sucks when you don't get it, but you have to realize there is a strong marketing campaign at work to make you care about stuff like that. We had fairly strong feelings about wanting to bootstrap our company before we applied, and I think not getting in really helped us solidify those values. I will say that many companies that get funded from YC aren't ones that you described. Many have no users or even a launched product, just a big vision in a target market. There's nothing wrong with that, but I just wanted to point out that there is a difference between an unlaunched company getting seed funding and one that wants to execute on an opportunity and could really utilize capital.