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Though I agree with you that it's important to stay positive and work to create rather than destroy, I share many people's concerns about potential misallocatio
by kyledrake 12y ago
Though I agree with you that it's important to stay positive and work to create rather than destroy, I share many people's concerns about potential misallocation of investment capital in tech startups right now, because the current model largely depends on it for it's continued sustainability. VCs need liquidity events in order to make a return, which are provided by going public, or by being acquired by companies that have already gone public and thus have large slush funds for acquisitions.
If that goes away, it could be a problem for the current model, because it's not designed to work for small success or failure mitigation. So if the stock market bottom falls out, it potentially takes down a lot of very promising startups that could have been successful and profitable with a different strategy. Their failures may not even be their fault, but simply bad market timing. This isn't a new thing, of course - it's been happening since the Panic of 1873. We're not exceptional to this risk, but I don't think we should ignore it.