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Startups Rejecting Venture Capital

nytimes.com

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Re: Startups Rejecting Venture Capital

#91

Post by hsk0823 »

billconan wrote: post #80
hamandcheese wrote: post #53

Earlier quoted context omitted.

This is assuming one can get hired by a FAANG, which is not true for many.

I’m about to join a startup. I just want to do meaningful work and learn new things. I view it as a learning experience. I am so fed up with corporation life. I don’t see a way out other than joining a startup or starting my own. I don’t want to deal with project managers and fill their spreadsheets anymore. The most valuable thing I have is the remaining time I have in this life. Not the number in my bank account.

Careful what you wish for, startups have people who will wear as many different hats as required to make it work. Corporate life may have had a really well defined job role, that may not be true in any startup you join.

Re: Startups Rejecting Venture Capital

#92

Post by jonlucc »

niccolop wrote: post #71
jchrisa wrote: post #38

Earlier quoted context omitted.

Free healthcare, free college, and a UBI would go a long way toward making starting a company realistic for more people.

But yet somehow Europe is a wasteland by comparison to the States for startups. In many, particularly, Northern European countries health care and college is the norm, even if UBI is further off, there are many subsidies and benefits one can have. It is the desire, hunger, and unmet needs that creates many startups.

I don't think so; there must be many other factors. You seem to be saying that people are more motivated by not being able to afford healthcare and college for themselves or their kids, and that seems bonkers to me. If that were the motivation, people would be getting jobs at universities rather than founding startups, as most universities have fantastic health insurance and reduced tuition for employees' children. On the other hand, if I have a chronic medical condition, I can't currently leave to found a startup without risking my health alongside all the money I'm risking by quitting my job.

Re: Startups Rejecting Venture Capital

#93

Post by x220 »

billconan wrote: post #80
hamandcheese wrote: post #53

Earlier quoted context omitted.

This is assuming one can get hired by a FAANG, which is not true for many.

I’m about to join a startup. I just want to do meaningful work and learn new things. I view it as a learning experience. I am so fed up with corporation life. I don’t see a way out other than joining a startup or starting my own. I don’t want to deal with project managers and fill their spreadsheets anymore. The most valuable thing I have is the remaining time I have in this life. Not the number in my bank account.

>The most valuable thing I have is the remaining time I have in this life

Then why work for a startup? Most will demand a huge amount of your time compared to other jobs. Why not pick a job which demands a sane amount of your time and spend your free time on relationships and hobbies?

Re: Startups Rejecting Venture Capital

#94

Post by eanzenberg »

hamandcheese wrote: post #53
hn_throwaway_99 wrote: post #39

Earlier quoted context omitted.

I think your point about employees is especially true, particularly since the large tech companies pay disproportionately so much more. If you are a senior-level software engineer, even if the startup is successful in the "unicorn" range, for most people that means an equity payout on the couple hundred K to the $1 million range for all but the very largest successes. Not bad at all, but when the FAANGS are already p…

This is assuming one can get hired by a FAANG, which is not true for many.

Conversely, this assumes one can get hired at a startup with a high position and equity to match fang comp, which is not true for many.

Re: Startups Rejecting Venture Capital

#95

Post by sflanagan »

will_brown wrote: post #58
eis wrote: post #8

VCs win if enough of their bets make it big enough to offset the ones that go under. Naturally the big hits are few and the ones that fail are numerous. That means the big hits need to be huge and the failures need to have a certain cap. The latter also means you can't run a company for 10 years in slowmo until they get profitable. And the big hits need to be huge which means they need to take over a nice chunk of a…

I think it’s just the start, soon there will be a much larger paradigm shift. Especially in tech where there is generally a large community of supporters who are willing to fund the projects they believe in directly. I think the Green Bay Packers is a perfect example, it’s the only “publicly owned” football team in the NFL and as a result when they need funding for large projects (like stadium renovations) they go st…

Who makes money off of the Packers? Startups may not be willing to take this model on if its less profitable for founders

Re: Startups Rejecting Venture Capital

#96

Post by ti3 »

hsk0823 wrote: post #86
simplecomplex wrote: post #63

Hard to turn VC money down when it’s practically free. None of the founders I know that raised seed capital even had a business plan. Hard to turn down $1,000,000 when all you have to do for it is say yes. Maybe go to a few meetings, make a PowerPoint. I mean really. Some of these investors haven’t even asked for any metrics, a web app was enough. It’s... shocking how cheap VC money is.

VC money is not free, there's a real cost to it, it's written on the term sheet. VC money is relatively easy money to obtain versus trying to grind for the same amount of capital yourself, but there's certainly a cost to any transaction.

Have you raised VC money recently or in the past? Raising is far from easy - in fact the opposite in my experience.

It's a full-time job for 1 person for months, or even the better part of a year. That's one founder taken away from keeping customers happy and building on the product.

The cost off the term sheet is real.

Re: Startups Rejecting Venture Capital

#97

Post by hsk0823 »

will_brown wrote: post #58
eis wrote: post #8

VCs win if enough of their bets make it big enough to offset the ones that go under. Naturally the big hits are few and the ones that fail are numerous. That means the big hits need to be huge and the failures need to have a certain cap. The latter also means you can't run a company for 10 years in slowmo until they get profitable. And the big hits need to be huge which means they need to take over a nice chunk of a…

I think it’s just the start, soon there will be a much larger paradigm shift. Especially in tech where there is generally a large community of supporters who are willing to fund the projects they believe in directly. I think the Green Bay Packers is a perfect example, it’s the only “publicly owned” football team in the NFL and as a result when they need funding for large projects (like stadium renovations) they go st…

The Packers model works because it's basically a scam, no one in Green Bay actually has any say over what the Packers do day to day but it feels good for Packer fans to say they own a part of the team. There's emotional buy in, it's not a rationale way to invest your money, and no one lends money with the idea that they're not going to see it again as a business.

Community support projects work for Kickstarter or Indiegogo marketing to the general public consumer, that's not the same thing as trying to build a B2B SaaS platform fixing a specific problem marketed at Fortune 500 companies.

Re: Startups Rejecting Venture Capital

#98

Post by eanzenberg »

duxup wrote: post #50
eis wrote: post #8

VCs win if enough of their bets make it big enough to offset the ones that go under. Naturally the big hits are few and the ones that fail are numerous. That means the big hits need to be huge and the failures need to have a certain cap. The latter also means you can't run a company for 10 years in slowmo until they get profitable. And the big hits need to be huge which means they need to take over a nice chunk of a…

"VCs were able to control the startups they invested in to a pretty big degree." I don't think you're wrong, but I always thought VCs were there to hopefully guide these organizations too. Control, guide, probabbly overlap a lot. But the idea being you get capital, introductions, maybe help finding some people you need? Granted I don't think you're wrong about the rest of it but control (when you sold yourself...), a…

Yeah, when a good VC owns 30% of your company they are invested in seeing this grow and succeed. There are other VC which are handsoff and do a spray pray approach to investing.

Re: Startups Rejecting Venture Capital

#99

Post by eanzenberg »

jonathankoren wrote: post #76
eis wrote: post #35

Earlier quoted context omitted.

Not worthless but the deal they get is usually a lot worse than the deal a VC gets. Are they getting paid enough to account for the risk? A VC will make more money and have less risk (overall). An employee will most likely make not much more than working for an established company and have a high chance of losing his job within a few years.

Exactly. The idea that Founders take on so much more ”risk” than early employees, and so deserve multiple orders of magnitude more reward is laughable. There’s no difference in the risk of a founder and employee 1. They’re both out of a job and perhaps underpaid at first.

Do you consider the value add of a founder and 1st employee the same?

Re: Startups Rejecting Venture Capital

#100

Post by ngngngng »

One thing I don't understand about VC money, and i'm not even sure how to phrase this, are the founders of startups able to pay themselves enough that they're set even if the business fails? What's to stop intelligent people from getting funded, paying themselves large salaries, and then not really caring if it fails or not because you're a couple hundred thousand dollars richer?
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