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Startups Rejecting Venture Capital

nytimes.com

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Re: Startups Rejecting Venture Capital

#111

Post by strgcmc »

neom wrote: post #5

To be fair, the NYC VC scene is also abysmal. From what I've experienced there are less than 5 established VC firms (on their 3+ fund) in the city with an eye for vision investing and really want to get behind Founders. I think I made fundraising much much much harder for myself by focusing heavily on raising in NYC. Sadly, many SF folks won't invest in NYC startups due to proximity, so then you're faced with moving…

Just curious, if you're dissatisfied with NYC and the ~5 established funds you've experienced, have you expanded your search parameters a bit? Meaning, looking around in a bit wider regional area, or looking at little-less-established firms? For example, across the river in Newark, NJ, there's : https://newarkventurepartners.com/ .

Re: Startups Rejecting Venture Capital

#112

Post by hsk0823 »

jonlucc wrote: post #81
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…

Maybe this is hopelessly naive or dumb legally difficult, but I wonder if a VC might have a slight advantage by offering funded companies a portion of the fund itself. They might be more enticing to founders. Of course there's still some severe disadvantage for employees. I'm thinking about a Planet Money episode that discusses big-time poker folks, and they frequently trade percentages of their winnings such that if…

But that's a deal a VC wouldn't make in the first place.

Re: Startups Rejecting Venture Capital

#113

Post by tiuPapa »

billconan wrote: post #109
hsk0823 wrote: post #91

Earlier quoted context omitted.

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.

I think I'm very entrepreneurial. "wear as many different hats as required to make it work", this is basically what I do for my side projects. I write both the web frontend (vue) and backend (in c++), do devops, content marketing, whereas my day job is device driver development.

> Backend in C++

Why? Is that simply because you are more familiar with the language or does the project actually require the raw power of Cpp?

Re: Startups Rejecting Venture Capital

#114

Post by headmelted »

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…

To your point, a lot of the traditional appeal that working at a startup has for engineers has been the options.

When you take that (significant) compensation away it should make the job much less appealing. I think a lot of younger (by which I mean years of experience in the industry rather than age) talent has forgotten or is not aware that this is why a startup job became the "done thing".

For many, they'd be better served by working at an established company (even temporarily if they have ambitions of their own startup in the future) as the package will be much better, and because the traditional upside of working for a startup largely doesn't exist anymore.

Re: Startups Rejecting Venture Capital

#115

Post by sambroner »

mr_puzzled wrote: post #9

Reposting my question : So let's stay I start a startup, grow and manage to take it public, what happens next? Is the company expected to keep growing indefinitely? What happens if growth is stagnant, but the company is profitable? I also hear about the mid-life and late stage of companies. Can you explain what these terms mean and how being in these stages affects the company? Are there any good examples of publicly…

Just to answer one question...

There definitely are companies that are on the stock market without a growth mindset. One way to identify them is to look for companies that return a significant amount of money to their stock holders in the form of a dividend.

Many REITS fit this description as utilities and telecom companies.

I'm always surprised this answer doesn't come up more, but I guess these companies aren't particularly sexy.

Note: These companies still feel market pressure. No one is staring at Duke Energy expecting them to grow 15% a year, but people would be pretty frustrated if DUK broke its 13 year 4.5% dividend streak.

Re: Startups Rejecting Venture Capital

#116

Post by megaman8 »

dunpeal wrote: post #72
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…

Precisely. A senior engineer can certainly hope to make $400k or more per year for good performance. Not just in FAANG either - plenty of other profitable businesses are competing for the same grade of talent and thus pay in the same range. Only a handful of almost surefire unicorns can reasonably come anywhere near matching that, and that only in the eventuality that they don't pull a Zenefits and leave you hundreds…

> "hope to make 400k"

Even with 10-20 years of experience in the bay area at small, medium, large size software companies, I've never ever made anything close to that amount.

Re: Startups Rejecting Venture Capital

#117

Post by billconan »

x220 wrote: post #108
billconan wrote: post #105

Earlier quoted context omitted.

the startup is in robotics, highly aligned with my interests.

All the startup employees I've talked to work 80 hours a week. Why is robots so important to you that you're willing to accomplish absolutely nothing in at least a few of the important areas of your life such as health and fitness, friendships, romantic relationships, extraneous interests, relaxation, or family?

there are 2 kinds of engineers,

one kind sent rockets and recollected them, made robots run and jump. The other kind, shrank blog posts to 140 characters, or added a timeout to short messages, removed the thumb down button, and called them a new feature.

Today, we still remember the names of da Vinci, Tesla, Turing, not because they had a successful family ...

I just want to keep the dream I had as a kid.

Re: Startups Rejecting Venture Capital

#119

Post by will_brown »

hsk0823 wrote: post #97
will_brown wrote: post #58

Earlier quoted context omitted.

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 Ind…

The Green Bay Packers are valued at $2.35B...not bad for a non-profit.

How is the Packers model a scam? Because people support it and don’t get profits? Does that make the 90% of VC funded startups that fail scams? Are other NFL teams that are privately owned scams, because as I said the NFL publicly acknowledges the Packers community ownership is a competitive advantage over the other teams.

Sure maybe people won’t directly support your b2b software application marketed at Fortune 500 companies, but as a counter example many of the next fourtune 500 companies could easily adopt a community ownership model in a similar fashion as the Packers (only for profit).

People like community ownership and governance...there are many examples beyond the Packers to establish that. People don’t necessarily like the VC model and having to take money from wealthy people who take a chunk of your company just to compete on a level playing field.

Re: Startups Rejecting Venture Capital

#120

Post by hsk0823 »

ngngngng wrote: post #100

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?

Of course. That's part of raising capital, is funding employee salary. Of course it's not a "they're set", it's a market rate salary given the size of the company and the role you do for the company.

What's to stop VC fraud? Generally when you accept VC money, you're giving a board seat to said VC, who is there to yes guide with experience, but is also there to protect their investment.

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