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Multiple anecdotes does not equal data. Sure there are plenty of burnouts. If you did a study of software startups, I think you'd find: * Startups that exit

Multiple anecdotes does not equal data. Sure there are plenty of burnouts. If you did a study of software startups, I think you'd find: * Startups that exit for an amount that returns meaningful $ for the earliest investors (YC, TechStars) are likelier to have taken additional funding. * Startups who exit for HUGE money (Google, etc) almost ALWAYS take Series A rounds. If those are both true, do you REALLY think this isn't an important milestone for TechStars, YC, and the founders (if a big exit is their goal)?

yankeeracer73 17y ago
Couldn't I say the same about your facts? Do you have numbers to show that those companies who do take money are likely to be more successful than those who don't, or who pursue money via alternative means? Most VC deals fail and they don't get their money back or break even. The few that make many multiples are what make their firms.
- zaidf 17y ago
  Do you have numbers to show that those companies who do take money are likely to be more successful than those who don't Sure, just look up the number of companies that have gone public without taking Series A. Not many. Thus, it wouldn't be far fetched to conclude that in order to be successful at that(IPO), you generally have to go through a VC. None of this means that going through VC route won't result in majority failures. But that point is completely irrelevant. Most startups fail--VC or no VC--so pointing out failure in non-relative terms is insiginificant.
- webwright 17y ago
  You could, but that's the difference between anecdotes and data. Can you really look at my 2 bullet points and say, "I think the data would show those to be false?" There've been studies showing this stuff (PG actually mentioned one during YC, if I recall correctly). Don't have 'em handy. The truth (supported by data) is that large dollar exits are vanishingly rare without outside funding (but sure-- they've happened). Can you name 1 large exit or IPO that had no Series A round? Can you name 5? Note that I'm NOT saying that outside funding increasing your chance of survival (I'd GUESS that the funding path is a riskier one) "The few that make many multiples are what make their firms." Absolutely. For all I know, a Series A REDUCES your chance of business survival... But the data shows that it increases your shot at a big exit (which is what a lot of people are in the game for).
  - jacquesm 17y ago
    I wished I could disagree with you :) It's absolutely true, a series A is like a lottery ticket, suddenly you're a gambler, no longer working day to day to make ends meet, but the clock is running and you have to 'score' at a much higher level than you would have to score at without that investment. Your chances of 'scoring' just went up, but your chances of staying alive just went down about as much. It would be nice to see an analysis of how outside investment changes the sum total, in other words, is this a 'zero-sum-game' and are the 'funded' companies taking away as much by their much bigger chances at collapse than what they would have made if none of them got funded (keep in mind that lots of money gets lost not only because these businesses fail, but they also take their investors money down the hole with them) or is the capital injection a net gain ? Incidentally, I know of one very successful exit (and IPO) that was done without outside investments but it was in the mid-80's, not related to online business, and I know of one online venture that got bought out for a fairly ridiculous amount of money. But that's the total score.

yankeeracer73 17y ago

Couldn't I say the same about your facts? Do you have numbers to show that those companies who do take money are likely to be more successful than those who don't, or who pursue money via alternative means? Most VC deals fail and they don't get their money back or break even. The few that make many multiples are what make their firms.

zaidf 17y ago
Do you have numbers to show that those companies who do take money are likely to be more successful than those who don't Sure, just look up the number of companies that have gone public without taking Series A. Not many. Thus, it wouldn't be far fetched to conclude that in order to be successful at that(IPO), you generally have to go through a VC. None of this means that going through VC route won't result in majority failures. But that point is completely irrelevant. Most startups fail--VC or no VC--so pointing out failure in non-relative terms is insiginificant.
webwright 17y ago
You could, but that's the difference between anecdotes and data. Can you really look at my 2 bullet points and say, "I think the data would show those to be false?" There've been studies showing this stuff (PG actually mentioned one during YC, if I recall correctly). Don't have 'em handy. The truth (supported by data) is that large dollar exits are vanishingly rare without outside funding (but sure-- they've happened). Can you name 1 large exit or IPO that had no Series A round? Can you name 5? Note that I'm NOT saying that outside funding increasing your chance of survival (I'd GUESS that the funding path is a riskier one) "The few that make many multiples are what make their firms." Absolutely. For all I know, a Series A REDUCES your chance of business survival... But the data shows that it increases your shot at a big exit (which is what a lot of people are in the game for).
- jacquesm 17y ago
  I wished I could disagree with you :) It's absolutely true, a series A is like a lottery ticket, suddenly you're a gambler, no longer working day to day to make ends meet, but the clock is running and you have to 'score' at a much higher level than you would have to score at without that investment. Your chances of 'scoring' just went up, but your chances of staying alive just went down about as much. It would be nice to see an analysis of how outside investment changes the sum total, in other words, is this a 'zero-sum-game' and are the 'funded' companies taking away as much by their much bigger chances at collapse than what they would have made if none of them got funded (keep in mind that lots of money gets lost not only because these businesses fail, but they also take their investors money down the hole with them) or is the capital injection a net gain ? Incidentally, I know of one very successful exit (and IPO) that was done without outside investments but it was in the mid-80's, not related to online business, and I know of one online venture that got bought out for a fairly ridiculous amount of money. But that's the total score.