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Ask HN: Why are start ups today raising so much money?
Amazon, which I would assume is one of the most capital intensive tech companies in the last 20 years, raised $54 million in its IPO. I am sure they have acquired other forms of financing since, but private start ups (Uber, Pinterest, Spotify) today are raising $1B+ in private equity rounds. Why do these start ups today require so much additional capital (in equity) compared to those of the mid 90s? What are these companies doing that is so capital intensive?
- symbion 12y agoHype (partially) is a factor. Others are : - Fear of missing out on the "next" facebook. - Investors are risk averse. They tend to flock in to deals where other investors are already in. - Disruptive market technology (with huge potential payout) -> invest a lot -> get bigger equity/ownership percentage and then make some big returns.