Not really unique to VC, similar things are happening to private equity with secondary funds.
VC isn't VC anymore
141–150 of 255 posts
Re: VC isn't VC anymore
#142Earlier quoted context omitted.
I'm in a startup, and we are (somewhat lazily) trying to do Series A fundraising. We _are_ a company that has AI as a part of our app, but not an LLM company. The advice from our early investors was to basically overhype ourselves, telling that we can transform the world overnight. And also to remove any mentions of our _actual_ product that has real paying users because it can muddy the grand vision. Another hot thi…
I have so many thoughts about this, I'm not sure where to start. Doing a raise has always been weird, there are lots of things that impact it, and different players in PE have totally different theses and motivations. As a founder, finding the right investment partner has always been one of the most important and difficult things. As a rule of thumb, I recommend to founders that only about 50% of the value of the inv…
It's not our first fundraise, and not our first startup. But something _is_ distinctly different this time. People are no longer willing to wait for years and are betting on nebulous claims in hopes of a huge payout.
And I feel that this goes far beyond the usual VC risk-taking.
Re: VC isn't VC anymore
#143Let's keep praying for fewer and fewer regulations, it's going great! I didn't know that VCs were ever "not cancer", I've always known them like that. Also my experience with startups is that it is a big scam for employees, but I understand it's not always the case (maybe it depends on where in the world?). I have been an early employee in multiple startups that got the founders rich, and what I got from the stocks d…
Startups define different classes of stock. The class A shareholders are the founders and investors. Everyone else gets class B shares. The A class shares don't get diluted, and they are inherently worth more anyway.
Pref shares do get diluted, they are however senior to common stock so they get money FIRST if there’s not enough to go around. There is some cap on this and sometimes it’s pretty high. Huge pref overhangs are, indeed, a problem.
Pref shares with a 1x preference are still worth like 10x common stock in early stage companies and it’s common for employed to get fucked by this.
Founders don’t get preferred shares (I think it’s really, really rare). There is founder pref stock, which is somewhat different. It’s common for founders to cash out some shares along the way, though.
Re: VC isn't VC anymore
#144Earlier quoted context omitted.
The Gilded Age didn’t just “pass”. It was ended by strong unions and antitrust legislation (and enforcement). Passivity will kill us if we let the oligarchs have their way. Hope is not a plan. Appeasement will have no more success than it did in WWII.
The default oligarch orientation is to treat workers as slaves to the maximum possible extent. Firefights with guns, hand-to-hand violence, and real deaths were needed to give unions the leverage they had. For some reason this history isn't taught in schools.
Maybe not yours but it was taught at my mediocre public school. We definitely covered Fort Frick, the Pinkertons, the Haymarket bombing, formation of the IWW and AFL-CIO, etc. For some reason people just tend to not pay attention or remember anything from their high school history classes.
Re: VC isn't VC anymore
#145Earlier quoted context omitted.
Of course it can fail, just like the AI circular investment moves can fail just like the Soviet Union failed. Too much decisive power in too few hands, disconnected from reality, disconnected from competition, disconnected from outside community criticism. It fails open loop. A lot of money can temporarily buffer the failure, but already we see world wide inflation and interest rate increases from the open loop decis…
or it can not fail, like North Korea
> or it can not fail, like North Korea
It's worth noting North Korea probably is not a failure for Kim Jong Un an his ilk, it's just a failure for most other North Koreans.
That's probably a happy end-state for these "Cancer Capitalists."
Re: VC isn't VC anymore
#146Earlier quoted context omitted.
Sometimes I wonder if people will one day wake up and just ditch all the tech. That's seems to be the only way to be out of this mess.
Hard disagree. Societal change and more inventions are needed, not a degrowth attitude.
Like Dear Alice. https://www.youtube.com/watch?v=z-Ng5ZvrDm4
Re: VC isn't VC anymore
#147I've been in an interesting spot the last few months. I've pitched probably two dozen or so VCs and, and while almost every case showed interest, it was quickly followed by "rules" and "desires" that were antithetical to the product. The product I am building is a decentralized trust system. The word "trust" is literally in the name. It requires very specific decisions and a very specific organizational and legal str…
It hasn't occurred to you that your idea might not stand on its own? If your product was amazing, serious and highly ethical investors would throw themselves over each other to invest with you. There are many such investors, but they have strict requirements on what they invest in as well.
You don't have any God given right to other people's money for high risk ventures. Neither does anybody else. But it's easy to blame "the system" when things don't go our way.
Re: VC isn't VC anymore
#148Earlier quoted context omitted.
Of course it can fail, just like the AI circular investment moves can fail just like the Soviet Union failed. Too much decisive power in too few hands, disconnected from reality, disconnected from competition, disconnected from outside community criticism. It fails open loop. A lot of money can temporarily buffer the failure, but already we see world wide inflation and interest rate increases from the open loop decis…
Look at Silicon Valley Bank that was also "too big to fail" and when it did the taxpayer had to bail it out. If something is too big to fail, it's too big, the regulator should have stepped in earlier to chop it up.
Nit:Taxpayers didn't have to pay money for the bailout. FDIC is an insurance program with premiums paid by banks
Re: VC isn't VC anymore
#149I’m a VC and agree with much of this. The mega firms have totally warped VC and the desire for massive cash appreciation has led to a host of bad characters getting involved. I still love working with early stage companies but it is hard to cut your own lane when these mega groups control so many aspects of the stack and have such outsized capital and political influence. There are so many issues destroying early sta…
I'm in a startup, and we are (somewhat lazily) trying to do Series A fundraising. We _are_ a company that has AI as a part of our app, but not an LLM company. The advice from our early investors was to basically overhype ourselves, telling that we can transform the world overnight. And also to remove any mentions of our _actual_ product that has real paying users because it can muddy the grand vision. Another hot thi…
You’re better off bootstrapping/self-funding and just being a humble old business, not a startup.
Re: VC isn't VC anymore
#150Earlier quoted context omitted.
> Nobody ever promises you any specific valuation or fraction of the company Would you mind asking before saying what I have been promised? Also it feels like you have never been in a startup. The whole language of growth everywhere, the "billion-dollar startup", the "becoming a unicorn", this is all suggesting that "you're part of it and it matters to you if it becomes a unicorn". But it doesn't, really. Because you…
I was given a very large number of very low value shares. The company was about 60 people iirc and I think the hr guy said well we won't IPO soon but when we do, these shares might be worth a lot! Companies often aim for shares to be worth 10, 20, 50 dollars at IPO! Something like that. But it's obviously just vague pep talk. They also sometimes say everyone is there to make the world a better place... It would be a…
It’s strange, every startup offer either is obviously a horrible scam or comes from a place of fairness and is sold like a total scam.
I guess being honest brings about too many opportunities for people who don’t understand the finances to make (or be perceived to make ) promises they can’t keep. So you might as well just get into a race to present the most ridiculous stuff possible.