4 ms·

I know a lot of zombie startups that make little to no money, yet they raised seed rounds that will last them 2 years. I know a handful of other startups that

by tonydiv 12y ago

I know a lot of zombie startups that make little to no money, yet they raised seed rounds that will last them 2 years. I know a handful of other startups that were "acqui-hired" but the founders did not see any returns (and the VCs didn't even get their initial investment back). Even in the case that the returns were 1.2x the initial investment, these are not the winners that investors are looking for. I would love to see a more in-depth analysis of these situations, but unfortunately, many of them are not publicized.

balls187 12y ago
> I know a lot of zombie startups that make little to no money, yet they raised seed rounds that will last them 2 years. Were these zombie startups in YC or Techstars?
- ed 12y ago
  You see this in the startup world in general. Worth noting there's often a lot going on behind the scenes at zombie startups – off-label experiments, etc., so they can be less dead than they appear.
- tonydiv 12y ago
  Both.
champion 12y ago
I loved TechStars but the WSJ analysis seems flawed. Primarily because I think that data is stale (there are definitely zombie/dead companies counted as "active") and a category like "acquired" it too vague. The way it reads it seems like that was a good outcome (and for companies like Gradcad it was!) but many others it is basically acquihire. There was a good conversation between Dave McClure and Sam Altman about value of the grand slams vs singles/doubles: http://www.youtube.com/watch?v=489JA4ERzUY http://www.youtube.com/watch?v=489JA4ERzUY
- ojbyrne 12y ago
  I don't think its flawed as much as limited by the availability of hard data about acquisitions, or the profitability of existing companies, and they addressed those issues to some extent. So basically I see it as interesting, and better than nothing at all.
  - tarr11 12y ago
    This data isn't as hard to collect as it seems. Contact each company, and ask then. There are less than 1000 data points here.
    - 001sky 12y ago
      Companies are under no obligation to co-operate. I also think you're mis-under-estimating how news stories are written. Maybe this is an opportunity for people who specialize in telephone surveys? As boss or an employee question is about good use of company time. Not to mention the p/r and confidentiality considerations.
    - ojbyrne 12y ago
      Even if companies were willing to be forthcoming about profitability and the terms of acquisitions, there are probably fiduciary and other legal requirements that would preclude that.

by tonydiv 12y ago

balls187 12y ago

> I know a lot of zombie startups that make little to no money, yet they raised seed rounds that will last them 2 years. Were these zombie startups in YC or Techstars?

ed 12y ago
You see this in the startup world in general. Worth noting there's often a lot going on behind the scenes at zombie startups – off-label experiments, etc., so they can be less dead than they appear.
tonydiv 12y ago
Both.

champion 12y ago

I loved TechStars but the WSJ analysis seems flawed. Primarily because I think that data is stale (there are definitely zombie/dead companies counted as "active") and a category like "acquired" it too vague. The way it reads it seems like that was a good outcome (and for companies like Gradcad it was!) but many others it is basically acquihire. There was a good conversation between Dave McClure and Sam Altman about value of the grand slams vs singles/doubles: http://www.youtube.com/watch?v=489JA4ERzUY http://www.youtube.com/watch?v=489JA4ERzUY

ojbyrne 12y ago
I don't think its flawed as much as limited by the availability of hard data about acquisitions, or the profitability of existing companies, and they addressed those issues to some extent. So basically I see it as interesting, and better than nothing at all.
- tarr11 12y ago
  This data isn't as hard to collect as it seems. Contact each company, and ask then. There are less than 1000 data points here.
  - 001sky 12y ago
    Companies are under no obligation to co-operate. I also think you're mis-under-estimating how news stories are written. Maybe this is an opportunity for people who specialize in telephone surveys? As boss or an employee question is about good use of company time. Not to mention the p/r and confidentiality considerations.
  - ojbyrne 12y ago
    Even if companies were willing to be forthcoming about profitability and the terms of acquisitions, there are probably fiduciary and other legal requirements that would preclude that.