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Could VC be a Casualty of the Recession?

paulgraham.com

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Re: Could VC be a Casualty of the Recession?

#91

Post by pg »

dpapathanasiou wrote: post #77
pg wrote: post #4

Earlier quoted context omitted.

If I were motivated only by self-interest, I should want later stage investors to drop out. That would leave seed stage investors like YC as the only game in town. And incidentally, I don't see why it's easy to upper bound wealth creation over any time period. If everyone woke up tomorrow and started working twice as hard, what would limit their output?

" If I were motivated only by self-interest, I should want later stage investors to drop out. That would leave seed stage investors like YC as the only game in town. " But isn't the entire YC experience designed to get angels and VCs at demo day to make an investment in each company?

No, the main focus is on whatever the startup is building. Toward the end of each YC cycle we switch to talking about how to pitch to investors. But even there the way to be convincing is to be working on something genuinely great, and just tell the truth about it.

Re: Could VC be a Casualty of the Recession?

#92

Post by pg »

jgrahamc wrote: post #68
mattmaroon wrote: post #31

You've been unusually prolific lately.

Maybe we're just seeing a buffer being flushed. He may have worked on all this stuff earlier.

Partly. "High-Res" and "Artists Ship" were both things I started during the summer and didn't have time to work on again till after interviews. This last one I wrote a month ago and then had to sit on because it was supposed to appear in a print report.

I actually forgot about "Artists Ship." Then a few days ago I was talking to Paul Buchheit and he mentioned how great it was to be able to release code instantly at Friendfeed, compared to the delays he had at GMail. As we talked about the question I had this weird sense of deja vu, so I went home and looked around my hard drive, and sure enough there was this nearly finished essay. The write date was Aug 11, so I must have started it just before Demo Day and then forgotten it during the ensuing bustle.

Re: Could VC be a Casualty of the Recession?

#93

Post by blurry »

drwh0 wrote: post #34
wheels wrote: post #25

Earlier quoted context omitted.

Biotech, greentech and embedded systems are a few areas that look poised to keep growing and need a more significant amount of capitalization to get off of the ground.

but greentech will require more funding per instance than any VC firm will be able or willing to put up. show me the VC firm that is going to put over $1 billion into any single investment...when it comes to nuclear or hydrogen, a billion might only bootstrap the company. these industries are going to need massive amounts of funding. only one entity can do it - uncle sam, DARPA and the DOE

If you believe Al Gore, for $90MM you can build a giant New Mexico wind/solar farm that would supply enough electricity to power the entire US. (It's been a while since I saw the presentation so some details might be wrong but I am at least in the ballpark, especially regarding the price tag). Seems like 10 VC firms could easily get that sort of money together.

Re: Could VC be a Casualty of the Recession?

#94

Post by pg »

calambrac wrote: post #51
pg wrote: post #42

Earlier quoted context omitted.

The valuation goes up between us and a series A round, but in a successful startup it should go up much more afterward.

How many companies that get a series A round end up being successful? It seems like having that opportunity to decide if you agree that the company will keep growing or that you've made enough and would rather reinvest in the next round of startups would be nice to have.

It wouldn't be nice to the startups to do that, because it would send an alarming signal to the series A investors that would drive down the valuation and maybe even prevent the round from closing.

Re: Could VC be a Casualty of the Recession?

#95

Post by ph0rque »

pg wrote: post #92
jgrahamc wrote: post #68

Earlier quoted context omitted.

Maybe we're just seeing a buffer being flushed. He may have worked on all this stuff earlier.

Partly. "High-Res" and "Artists Ship" were both things I started during the summer and didn't have time to work on again till after interviews. This last one I wrote a month ago and then had to sit on because it was supposed to appear in a print report. I actually forgot about "Artists Ship." Then a few days ago I was talking to Paul Buchheit and he mentioned how great it was to be able to release code instantly at F…

Can you tell what kind of company commissioned or requested this essay? I'd speculate it was one of the top VC firms...

Re: Could VC be a Casualty of the Recession?

#100

Post by timr »

Raphael wrote: post #69
timr wrote: post #66

Earlier quoted context omitted.

The problem is, "low cost of entry" is just another way of saying "commoditization". Your argument depends on the assumption that because it's cheaper to produce a website than (say) a motherboard, it's therefore going to be easier to create a valuable website. That's wrong. Ultimately, there's no strategic advantage to be gained by entering an industry where the barrier to entry is so low that everyone can do it. Wh…

Gee, after reading some of your comments, I almost feel like giving up on and going off to live in the woods.

The woods are peaceful, and have a way of changing your perspective. I recommend them.

(Seriously: I am not a pessimist, but compared to some of the wild-eyed optimism that gets thrown around here, I may sometimes seem like one. My world view is that, given a choice, you should live life in a way that maximizes health, happiness and satisfaction, not money. Start a company because you want to work for yourself, not because you want to get rich -- because you probably won't.

If your whole goal when starting a project is to achieve fame and fortune, you will go through life in an almost perpetual state of disappointment. If, instead, you make choices that allow you to live a good life now, you'll be happier by definition.)

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