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Don't Take VC Funding – It Will Destroy Your Company

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Re: Don't Take VC Funding – It Will Destroy Your Company

#181

Post by anonzzzies »

yowlingcat wrote: post #119
anonzzzies wrote: post #44

Earlier quoted context omitted.

OR (as you say, but many miss) you do not care about being the market leader. I just want to have a nice company with nice people, no stress and making millions for all to live. I don’t need vc money, stress, be the market leader or ‘be faster than the competition’. A LOT of services or products you can make a long term (decades) money with like this. I don’t need more than 10m euros in my life, nor do my colleagues…

> No idea why I want all this misery of competing, stress, exposure, running all the time etc etc. Have you ever run a business before? The belief that you can build a business without dealing with competition is a myth. Having a successful company requires picking your poison. Non-VC is a different poison than VC, and I do agree that it is a much better approach for far more many businesses. But make no mistake, hav…

> Have you ever run a business before?

Only 30 years. You? Not mean to be as snarky, but this US all or nothing stuff is getting on my nerves just a bit. I came from a simple background, but in a country with free education, so I got a degree in uni, opened a company in high school, all without too much risk. Didn’t need to work myself to death, didn’t have much stress, didn’t need VCs and make more than most here who seem to be dying of stress, lack of proper healthcare, free education etc etc. My clients like I have no funding and that I have enough money yet want to keep working as I like it.

Re: Don't Take VC Funding – It Will Destroy Your Company

#183

Post by harles »

Alex3917 wrote: post #167
jacquesm wrote: post #74

Earlier quoted context omitted.

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…

> Statistically, companies that raise venture capital are vastly less likely to succeed than those that are bootstrapped.

Any citation for this? I’m highly skeptical of this claim.

Re: Don't Take VC Funding – It Will Destroy Your Company

#184

Post by [deleted] »

anonzzzies wrote: post #44
raesene9 wrote: post #32

The article has a lot of interesting points, but seems to miss out on one of the main reasons (IMO) that startups take funding, which is to grow faster than (or as fast as) their competition. Unless you're lucky enough to be in a market segment without competition, you need to keep an eye on what your competitors are up to. If they can expand faster, add features faster and get more customers than you, it damages you…

OR (as you say, but many miss) you do not care about being the market leader. I just want to have a nice company with nice people, no stress and making millions for all to live. I don’t need vc money, stress, be the market leader or ‘be faster than the competition’. A LOT of services or products you can make a long term (decades) money with like this. I don’t need more than 10m euros in my life, nor do my colleagues…

[deleted]

Re: Don't Take VC Funding – It Will Destroy Your Company

#185

Post by metadat »

tptacek wrote: post #180
metadat wrote: post #56

Earlier quoted context omitted.

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).

Why are you meeting VCs? In what context? What else are they supposed to be in that context? It's a sales + finance job. If you're meeting them in a working context, and you're not transactional and don't have a really clear idea of what you're trying to accomplish, it'll be a alienating experience, except in the rare cases where they're going out of their way to be nice to you because you're out of your depth. I had…

Great points and perspective, thanks for sharing! Totally agree.

Having grown up in a family that runs a real estate firm, I can say the ratio is about the same - about 1 in 20 real estate agents are decent human beings who desire both to help others and make a living, and the rest are highly self-interested.

What I find interesting is the VC stories along the lines of "X VC really worked with and helped/saved us!". I haven't encountered such stories about any bank.

Re: Don't Take VC Funding – It Will Destroy Your Company

#186

Post by mgfist »

Alex3917 wrote: post #167
jacquesm wrote: post #74

Earlier quoted context omitted.

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…

For this to be a true comparison, you should look at how many flashlight apps were built.

Re: Don't Take VC Funding – It Will Destroy Your Company

#187

Post by hdivider »

Good article and topic.

What's missing though is so critical for our time: R&D.

Yes -- it's usually wise to act like investors don't exist. But are you going to look at the world and go "oh, what we REALLY need is another SaaS company!"

The most pressing problems today require hardware, software (incl. data science), and a research component.

How to fund it, if not with investors? (They don't fund R&D anyway.) Take a dual-use approach. Bootstrap with government R&D contracts -- and in parallel, commercialize it, so that you don't get stuck in gov too much of course. And/or license technology from federal labs or agencies. E.g. go to Lawrence Livermore National Lab, or Lawrence Berkeley, or Los Alamos, or the many agencies, NASA, NSF, DoE, DoD (which is colossal) and connect with tech transfer folks. They have advanced technology sitting on shelves, waiting for capable entrepreneurs to come and pick it up. Same for many academic institutions.

This is how we get true technology companies like Qualcomm, and many, many smaller but by no means less significant companies.

Make not just "what people want" but also what is technologically needed in this partly fallen world today.

Re: Don't Take VC Funding – It Will Destroy Your Company

#188

Post by fbdab103 »

Joeri wrote: post #127
adventured wrote: post #109

Earlier quoted context omitted.

Failure is definitely the commonality. The BLS reports typically that 1/2 of all new businesses (in the US) will formally fail within five years. One can safely guess that at least half of those remaining are something between zombies and hanging on by a thread. 1/4 or fewer will make it 15 years or more. And of course it varies by sector, restaurants notoriously have an exceptionally high failure rate. For all busin…

I’m wondering about the failure rate for technology companies. It may be higher or lower than restaurants, I have no intuitions.

There is somewhat fuzzy on where you even draw the line. Does someone moonlighting on their Wordpress side hustle count as a company? There are many of those which seem unlikely go bankrupt - the most frequent end state is the sole proprietor quits due to lack of work or interest.

Re: Don't Take VC Funding – It Will Destroy Your Company

#189

Post by martin8412 »

metadat wrote: post #46
eastdakota wrote: post #22

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…

Tangential: I'll never forget the story of Lee. One of the few times I've I've shed so many tears over someone I never met. https://www.wired.com/story/lee-holloway-devastating-decline...

I bawled my eyes out the first time I read it, and it's not any easier this time. I'm happy the success of Cloudflare has allowed him the best available care, even if all his money can't cure him within his own lifetime.

It's a horrifying disease.

Re: Don't Take VC Funding – It Will Destroy Your Company

#190

Post by nwienert »

eastdakota wrote: post #121
sumeno wrote: post #75

Earlier quoted context omitted.

That some people win the lottery is not a good argument for playing the lottery

The lottery is not a very good analogy. Let’s look at worst cases. In the lottery you put in cash and usually get nothing back. You literally learn nothing because every draw is random. At a VC-backed startup someone else gives you money. With that money you’re expected to pay yourself a salary. You get to learn at an incredibly fast rate on someone else’s dime. And you get that salary and learning even if your inves…

You get almost no money in salary, and you spend something way more valuable than money: time, during your most energetic and precious years of life typically. I think it’s really dangerous to put rose tinted glasses on the whole thing.

For anyone not upper class, if you spend 6 or so years chasing a startup and fail, and you’re a good software developer.. once you factor in savings and interest, your total opportunity cost is something like 2-4 million dollars. That’s making a good software dev salary for 6 years and saving some of it. That’s life changing for someone not already rich. And you’d still be learning a lot, plus working a much more relaxing job with time for side projects.

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