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Could someone enlighten me on why VCs put millions in a few companies with concepts they deem a multi-billion dollar industry and yet come up empty most of the
by paul7986 18y ago
Could someone enlighten me on why VCs put millions in a few companies with concepts they deem a multi-billion dollar industry and yet come up empty most of the time?
Why not invest smaller dollar amounts in more companies - they'll have more chances for hitting more home-runs.
With our current economy and the cost it takes to build a start-up I should hope VCs change their ways!
- aston 18y agoThis isn't the best place for this discussion, but the short version is that you can't take the amount of capital VC's are dealing with and invest it in tiny ways because you don't have the ability to manage all of those investments. Also, VC's don't need to win most of the time to generate great returns for themselves and investors.
- ph0rque 18y agoI had an idea about that very thing... what if there were yc-like firms in many of the notable cities/towns, and VCs funded them to fund the startups, thus outsourcing their management?
- fallentimes 18y agoIt could work, but I'd worry about fees and the build up of bureaucracy.
- sharpshoot 18y agoActually, a lot of the 'angel boutiques' are funded this way. This is how the VCs get some of their dealflow from trusted sources.
- fallentimes 18y agoAre those the same as angel groups? How effective are those? http://news.ycombinator.com/item?id=457100 http://news.ycombinator.com/item?id=457100
- neilk 18y agoAre we really sure about this? Look at what Kiva does with microlending. Granted, the path to profitability is a lot clearer when you are buying a sewing machine or something. I think the difference is that VCs specialize in businesses that require large amounts of capital, connections, etc., to work. Supposedly this is their forte.