A startup doesn't need to be a unicorn
mattgiustwilliamson.substack.com
A startup doesn't need to be a unicorn
1–10 of 363 posts
Re: A startup doesn't need to be a unicorn
#2"In fact, if you pitched this pathway to a VC, I’m sure they’d ghost you quicker than their last Hinge date." — oh they will, fr
Re: A startup doesn't need to be a unicorn
#3Also the other thing that I realised after working with a bunch of VCs is that they are all incredibly dumb. Few VCs are founders themselves and you will have better luck with them but the majority of VCs have simply no idea about product and technology and they are simply pattern matching. What that means is that they will cargo cult everything and if your startup doesn't fit the mold they will not respond to you favorably and the sad part is that the actual 10x, 100x returns that their VC firm needs comes from those type of investments but they simply cannot see them.
Re: A startup doesn't need to be a unicorn
#4[deleted]
Re: A startup doesn't need to be a unicorn
#5Yes, this is so true. I hope all our competitors follow this advice.
Re: A startup doesn't need to be a unicorn
#6Also the other thing that I realised after working with a bunch of VCs is that they are all incredibly dumb. Few VCs are founders themselves and you will have better luck with them but the majority of VCs have simply no idea about product and technology and they are simply pattern matching. What that means is that they will cargo cult everything and if your startup doesn't fit the mold they will not respond to you fa…
This.
Re: A startup doesn't need to be a unicorn
#7Hopefully, over time, we will get better and better in creating the world of software from small interoperable pieces that can be maintained by small teams or even solo entrepreneurs.
Re: A startup doesn't need to be a unicorn
#8Well yes, that's called a regular company. Not sure if I'm missing something here?
Re: A startup doesn't need to be a unicorn
#9Here's a model that exists in Germany, which I like:
You can present a business plan to the state's investment bank and apply for several financial aides, including:
* 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back.
* up to 20k EUR in "consulting fees", for which the bank will contribute up to 50%. Again, you don't have to pay it back, but obviously you need money for them to match.
* discounted loans, amount depends on business plan outlook
I've worked with an accelerator that helps founders write the required pitches and plans for this program. And while the majority don't make it (because they mostly realize their idea won't actually hold up to business planning scrutiny), some do. And those don't become hyperscaling unicorns, they become normal companies, growing organically as stable, solvent employers in the region.
Every once in a while a VC would stick its head in and encourage the startup to take on VC funding, and for an even smaller percentage (one in my time doing this), this worked. But for me, the organic growers are the best success story.
Re: A startup doesn't need to be a unicorn
#10Also the other thing that I realised after working with a bunch of VCs is that they are all incredibly dumb. Few VCs are founders themselves and you will have better luck with them but the majority of VCs have simply no idea about product and technology and they are simply pattern matching. What that means is that they will cargo cult everything and if your startup doesn't fit the mold they will not respond to you fa…
We also have a problem with VCs that want start-ups to scale quickly, even though this often builds incapable teams. We then say, "Oh, it's because they stopped being in founder's mode," whereas in reality, the team is so malcomposed and mismanaged that it could not build even a simple product.
This has happened a lot in games. Now, VCs have almost stopped pre-seed and seed funding in this industry. The global annual VC funding in games is about $1B, about 1.5 Call of Dutys. This is down from around 12B in 2022.
One could say they threw the baby out with the bathwater because while many executives were abusing the found-scale-exit business model and taking investors' money, many were also not. It's pattern-matching through and through, very little due diligence.