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I don't see any reason for the doom and gloom here. Series A funding isn't a lottery with a random 1 in 5 chance. The 80% of companies struggling to raise Serie
by il 14y ago
I don't see any reason for the doom and gloom here.
Series A funding isn't a lottery with a random 1 in 5 chance. The 80% of companies struggling to raise Series A are the ones without meaningful revenue or user traction. Why do they deserve to get funded?
A $1M seed round should be more than enough to get a SaaS business cash flow positive or get a consumer product to a meaningful user base. If you have failed to get there on a seed round, the answer isn't "give me more money", it's "the market is telling you to try something else".
$1M can be 2 years of runway. That's a long time to figure out what you need to do to get to product-market fit.
Most successful businesses don't have anywhere near that level of funding and are still able to make money on more constrained resources.
- exit 14y agowaking up to the reality that 80% of economic activity is unproductive sounds pretty doom and gloom to me. you think the other 20% will just absorb that labour?
- bryanh 14y ago> 80% of economic activity is unproductive The parent comment is talking about 80% of companies struggling to raise series A, not 80% of the entire economy or even the entire startup ecosystem.
- 001sky 14y agoThis is a good point: global economy>us economy>tech economy>vc backed co's>series A needed co's>series A not avails to co's etc.
- philwelch 14y agoAnd given that proviso: 1. Most of the labor is already in funded startups, because funded startups can afford to hire more labor. 2. Of the 80% of startups that can't get Series A, the founders and early employees can remain in the startup ecosystem. Some of them will eventually hit upon something successful as well. 3. If not, large companies and successful startups never have as many engineers as they need anyway because there is a shortage of engineers. It is not clear whether the pool of engineers stuck in unpromising, unfunded startups is larger than this shortage.
- robryan 14y agoI wouldn't say unproductive. Some of these companies will continue without further funding. A lot of the ones that don't will have broken new ground, educated themselves further for another go or are ending up at a big company either just as an aquihire or actually selling assets to the company.
- jpdoctor 14y ago> either just as an aquihire I think if there is an 80% death rate, then nobody has to worry about aquihire deals: Companies will simply go back to normal hiring.
- robryan 14y agoI don't think so. Of the companies that fail at series a, a small portion of them will be most desirable for big companies and will get aquihired. There will be plenty of super talented teams with great tech that don't get the product market fit or the market turns out to be too small or crowded to get a series a.
- il 14y agoSome of those 80% might be successful businesses and even exits that make the founders rich in the $20M-$50M range, they just don't have enough traction to be venture-scale startups. Or let's put it this way: 80% of startups will not reach $100M in revenue. Does that sound so bad?
- deleted 14y ago[deleted]
- hristov 14y agoThere are some areas where you do need a series A before you have revenue or user traction. Not all business ideas are php web apps or even SaaS.
- anigbrowl 14y agoI don't see any reason for the doom and gloom here. More like Pander Daily, IMHO.