No post body was provided.
Could VC be a Casualty of the Recession?
141–150 of 152 posts
Re: Could VC be a Casualty of the Recession?
#142No post body was provided.
Re: Could VC be a Casualty of the Recession?
#143What wizard is going to run your cheap adword campaign (or maybe adword is dead too?) How are people going to find your site? What’s your sale process and have you understood your audience? How are you going to answer those service calls and emails? Are you going to run the next Google on the cloud? There are costs associated with all of that, and, even if they are compressed by technology too, the investments required to keep differentiating yourself are increasing.
What’s worse perhaps is that, with all its focus on IT, Paul seems to forget that not all start-ups are web start-ups. How about biotech, cleantech, robotics? Is marketing and distribution free for those ones as well?
There is, as always, some truth in what Paul is writing - the man is smart - but in my view, VCs are certainly here to stay and scale those start-ups that can make it into serious money machines. What do you think?
Full comment at http://www.torevenue.com/?p=3
Re: Could VC be a Casualty of the Recession?
#144spell check time
"In a lot of startups—probaby most startups funded by Y Combinator"
you mean "probably" i assume. no big deal
Re: Could VC be a Casualty of the Recession?
#145"Could VC be a Casualty of the Recession"
No, the War in Iraq is.
Re: Could VC be a Casualty of the Recession?
#146See Valley Guru Michael Malone's "Washington is Killing Silicon Valley" in the Wall Street Journal for more on this. Be sure to consider all these new outside forces. Some factors are better than ever, but others are worse than ever.
Re: Could VC be a Casualty of the Recession?
#147The problem with the VC model is that they look for a large liquidity event in the short term, and so push companies aggressively to reach this goal. With the number of IPOs so low these days, these liquidity events are much more infrequent than they used to be, yet the VC model remains the same. It angers me that nobody is doing anything to innovate in this space, as funding is hands down the most limiting factor for a new venture's growth. I found this slideshare presentation which includes some of the freshest thinking I've seen on the subject. Any thoughts? http://cli.gs/g3BA9v
Re: Could VC be a Casualty of the Recession?
#148What about angel funding? Cnet News is carrying a story that sounds very scary (the news media thrives on scariness) about "Agnels flee tech start-ups":
http://news.cnet.com/Angels-flee-from-tech-start-ups/2100-10...
In the mean time, Mr. Megalomania Ray Kurzweil (who has yet to comment on how well his "house casino" hedge fund has been doing lately) said he's starting The Singularity University:
http://news.cnet.com/8301-11386_3-10155303-76.html?tag=mncol
Re: Could VC be a Casualty of the Recession?
#149Earlier quoted context omitted.
It's true that it can be dangerous not to take VC if your competition takes it. But it's not so dangerous if the reason you don't take it is that VCs are saying no to everyone, because that implies your competitors are also less likely to get it.
Yes, but the question the essay is setting out to answer is: what happens when the VCs recover? I think one of the last points I need to buy into the essay is that it isn't just the starting up costs which have gone down. The commoditization of computing in the cloud means that as long as you're profitable on a per-user basis the cost of scaling is also way down (although the amortized cost might be up). The other da…
This in my mind is the interesting question ... does cloud computing provide the means for scaling. No doubt a web business can achieve profitability on much less than before, but the question of whether VC is needed is in scaling that business to something other than a small profit maker and/or an exit to a larger company.
Re: Could VC be a Casualty of the Recession?
#150Very interesting ... I think this is true for a class of startups, but not all. The question for this approach will be how to achieve scale (of if they even want/need to) to achieve their goals.
While profitability can be achieved on $15k, is it sustainable and can it achieve scale on that money? Cloud computing may help, but may not solve it all. Facebook, Google, etc. all needed VC $ to fuel scale.
Implications exist for founders and early investors if future capital is needed for scale or an exit. If the goal is to either sustain the profitable model and owner control at lower revenue, then this model works. Also, if the goal is to sell to a larger company to achieve an exit and return, then it also works. All depends on the market opportunity and founder goals, but don't think it kills the need/importance of VC.
If the goal is to capture a significant market and be the leader, and software markets tend to be winner take most markets, then achieving scale fast is necessary and VC$ necessary even in a cloud model. Under the new landscape articulated by PG here, the underlying platform could be built & proven with angel money or no money, and thus preserve more upside and better terms for the founders that choose to seek scale in large markets.