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

Post by dijit » Sun, Jul 09, 2023, 6:15 PM UTC

sdenton4 wrote: post #248

dijit wrote: post #246

I'll take another position; since it might be keen to understand a little more from a different perspective. I am a person who is a non-founder startup CTO; my company does not have any venture capital funding and we have enough capital to go to market. However, certain institutions (especially US ones) give great discounts, insider incentives (such as early access to features or access to people) and so on to ventur…

Would it be possible to take ~$100k of VC funding to get the 'VC-funded' benefits without actually giving up any real control of the company?

Post by jacquesm » Sun, Jul 09, 2023, 6:18 PM UTC

tptacek wrote: post #233

Alex3917 wrote: post #217

Earlier quoted context omitted.

IIRC each time you raise a round, your chances of success go down by ~10x. Can't find a good cite offhand though.

Every time you raise a round, the outcome you're shooting for is magnified. If you're raising an A round, you're not getting acquired after your seed; you're rolling the dice on getting a much better outcome. If you're raising a B round, you've got some facsimile of product-market fit, and you've decided to take the company to the point where the only "successful" outcomes are denominated in hundreds of millions of d…

Post by chromatin » Sun, Jul 09, 2023, 6:18 PM UTC

tptacek wrote: post #94

hn_throwaway_99 wrote: post #85

Earlier quoted context omitted.

As someone who's worked for tons of startups, it's not that binary. For loads of industries, there is simply no viable path without significant outside funding (whether from a VC or very rich founder), and even if you look at some of the most famous outliers (like Atlassian), I don't believe the path they took is even viable these days anymore. For example, if you're selling any sort of business SaaS product these da…

(1) SOC2 is somewhere between $10,000 and $20,000 if you do it cheap. (2) That's a dollar amount that most bootstrappers can swing. (3) Critically, you don't do SOC2 until you have a critical mass of purchases requiring it. (4) Many (most?) of your customers, especially your early customers, won't require it, and/or will have alternate paths for companies without a SOC2 attestation. (5) When you finally do hit the bi…

Post by raffraffraff » Sun, Jul 09, 2023, 6:21 PM UTC

harles wrote: post #183

Alex3917 wrote: post #167

Earlier quoted context omitted.

> 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.

Post by tester457 » Sun, Jul 09, 2023, 6:23 PM UTC

echelon wrote: post #34

DethNinja wrote: post #14

On the other hand, my first self-funded startup got destroyed by a VC funded venture. They had a worse product but far better marketing and they used every dirty trick in book to tarnish my company’s reputation. There is no way I’ll start another startup unless I receive backing from a huge VC company. Current economic paradigm is more similar to centralised/controlled economies of USSR. Thus if you want to succeed,…

I self-funded my startup to the tune of half a million dollars. I've had what I can only assume to be a VC-funded competitor study my endpoints for high latency / expensive queries, then saturate them with millions of requests a second across thousands of simultaneous IP addresses. Business is survival of the fittest. Pressures and growth gradients come in all shapes and sizes.