171–180 of 398 posts
You’re so right! It was an absolute disaster for us. Never do it!!!!! Kidding aside, it is true that raising money from VCs puts you on a very defined path with really only three potential outcomes: 1) failure, 2) sell to acquirer, or 3) go public. There are a small handful of exceptions, mostly for companies that throw off massive amounts of cash, but, realistically, those are the outcomes. If you don’t like any of…
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Of course it is unusual. But no less unusual than building a successful company to begin with. What's normal is failure.
> But no less unusual than building a successful company to begin with. Statistically, companies that raise venture capital are vastly less likely to succeed than those that are bootstrapped. Think about it this way: from the perspective of VCs, the most successful apps of the iOS era were Uber and AirBnB. But from the perspective of entrepreneurs, the most successful app of the iOS era was the Flashlight app. Which…
It seems likely that VC-funded app store pure plays without a recurring revenue SAAS component are much less likely to succeed than indie app store pure plays, but that's because VC is obviously the wrong model for one-and-done app store transactions. If you have a good idea for an app, don't raise for it (you'll have a hard time raising for it anyways).
https://www.youtube.com/watch?v=fhuSM8JTSpU
I think the biggest stain that was left from this era is that it mixed the millionaires made from cash flow with the millionaires made from empty valuations, and now the two are inseparable
Broad rule of thumb in finance is to understand how the people giving you money make money. Traditional VC is high-risk / high-reward. If that’s not your strategy, don’t take VC. OP seems to be describing small businesses. These frequently do need to raise capital to get going, and they do it through banks and the SBA. (That market entirely dwarfs traditional VC.)
Companies are valued by their future cashflows, not their present
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>remove the connection to the founder's vision How is that not destroying the company from the founder's perspective? Is there any way to take the "don't accept VC money" relevant to anyone that's not a founder?
Are “destroy the purity of my idea” and “destroy the company” the same?
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Except you absolutely don't need any connection to the central bank to benefit from their monetary policy.
Want to explain? I doubt bank loans were that much easier for startups in times of low interest and if anything the inflation hurts bootstrappers worse. https://www.politico.com/news/2020/06/07/wall-street-fed-bai... The Fed selected BlackRock to run a groundbreaking program to buy hundreds of billions of dollars in debt from large companies slammed by the coronavirus crisis. Certainly these connections help?
Low interest rates doesn't mean loans are “easier” (this is going to depend on the risk policy of the specific bank, and is mostly unrelated to the interest rate), but it lowered the interest rate you'd pay for every loan no matter who you are (I personally bought a house with a .7% interest fixed mortgage in 2019, I didn't have to personally know Christine Lagarde for that).
> if anything the inflation hurts bootstrappers worse.
Low interest don't drive inflation up (we've had anemic inflation for a decade of low interest), if anything, inflation leads to interest rates hikes.
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There is an option #4 that I’ve been around a few times: build a shark that is doing the acquiring within 5 years. Superior tech, maybe hyper efficient, hyper profitable.
You still eventually need to return money to your private market investors at some point. So that just pushes the outcomes out later. Or, again, in the super rare case that you’re generating so much case that you can pay investors back at a rate of return they’re happy with with dividended cash flows.
If that’s what you pitched them. Most businesses are private. Most rely on outside funding. Most of them never exit, and are never expected to.
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> You’re so right! It was an absolute disaster for us. Never do it!!!!! has cloudflare ever had a profitable quarter? I could give away my investor's $10 bills all day too
On a skim, they seem to be losing money the same way Amazon did. It's marginal, with a purpose, and could be turned around by trying to.
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> While there are plenty of VC horror stories, there are fairytales as well. What's the ratio, though??? 10/1? 20/1? 50/1?
In my experience, around 5% of VCs I've met in real life are truly decent human beings, even in cases where they don't have to be . The rest have been pure capitalistic sharks (which is understandable, given the entire sector filters for this).
I had a lot of animosity towards VCs from several bad experiences (with a company of mine that got funded, and then with another that didn't). But I've come to realize the commonality of those bad experiences was that I was naive about what was going on. I don't go to my bank hoping for camaraderie and sage advice. VC is tricky because of the "sales" layer it adds to the bank. The best parallel (this is probably really offensive to investors but it's more about me than about them) is real estate agents --- who I also had very bad experiences with, until I learned what was actually going on.