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VC isn't VC anymore

anildash.com

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Re: VC isn't VC anymore

#191

Post by cyberax »

claytongulick wrote: post #173
cyberax wrote: post #142

Earlier quoted context omitted.

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.

Interesting, I'm curious about the changes - I know AI has drawn most of the pump & dump sharks, just like crypto before it, but there were always a set of responsible holdouts that resisted fad-tech for real value opportunities. Are you seeing a difference there?

Yes, we are working with responsible VCs: endowments and large well-established companies in the field.

It's as if the whole industry is suffering from a high fever. This is purely my personal vibe, perhaps others might chime in with their subjective opinions.

Re: VC isn't VC anymore

#192

Post by chris_marino »

unknownfuture wrote: post #171
chris_marino wrote: post #151

The article does not mention or address an important contributor to the current state of VC. The increase in regulations, post GFC, made it impractical/impossible for small companies to go public. And, until recently M&A was actively avoided. The alternative was to stay private longer offering higher returns for private investors wanting to capture a (previously non-existent) illiquidity premium. The co-dependency of…

> The increase in regulations, post GFC, made it impractical/impossible for small companies to go public. Care to be more specific? "Regulations bad" is a pretty common platitude around here but you've stated your main thesis, here, without a hint of support to back it. My observation is that the glut of available private credit has meant for at least 15 years you could just raise funds from those markets, and that's…

Sure. SOX reg sec 302 and 404. Section 302 is a 100% dealbreaker for most companies, so I stand by my 'impossible' threshold. My comment was simply shorthand for all the upfront and downstream costs of going public, combined with fewer exit alternatives. Auditor/directors increased/personal liability, litigious shareholders, time and attention of management, etc. And, to your point, the lower cost of capital from growth investors. But that wasn't always the case. Certainly not true during the dot-com bubble (pre-SOX). I'll leave it to the academics to try to and isolate causality.

Re: VC isn't VC anymore

#193

Post by estearum »

cyberax wrote: post #191
claytongulick wrote: post #173

Earlier quoted context omitted.

Interesting, I'm curious about the changes - I know AI has drawn most of the pump & dump sharks, just like crypto before it, but there were always a set of responsible holdouts that resisted fad-tech for real value opportunities. Are you seeing a difference there?

Yes, we are working with responsible VCs: endowments and large well-established companies in the field. It's as if the whole industry is suffering from a high fever. This is purely my personal vibe, perhaps others might chime in with their subjective opinions.

Also a founder raising currently and big +1. VCs are off their fucking rockers.

Mad FOMO, listening to, believing, and benchmarking against actual liars (both obvious and non-obvious).

Re: VC isn't VC anymore

#194

Post by anildash »

chris_marino wrote: post #151

The article does not mention or address an important contributor to the current state of VC. The increase in regulations, post GFC, made it impractical/impossible for small companies to go public. And, until recently M&A was actively avoided. The alternative was to stay private longer offering higher returns for private investors wanting to capture a (previously non-existent) illiquidity premium. The co-dependency of…

Yeah, I did barely cover the shift in dynamics around IPOs. I originally had a lot more on that, but cut a lot out. I think what you point out is absolutely a huge factor.

Re: VC isn't VC anymore

#195

Post by andix »

sensanaty wrote: post #186
andix wrote: post #164

I think tech founders need to think smaller. Build software for a few thousand people and make a profit from it. Something niche. Something that is sustainable with a small team. VC eats up everything that's becoming bigger. And they will kill it. Their goal is not to run a healthy business that serves their customers. They try to take out as much money as possible and then trash it.

They don't give a shit about making a good product, the literal only thing any of these ghouls care about is line going up in the short term, because if line goes up they can dump their investments and move on to the next entity that they can get their greedy claws on and devour.

This is becoming more and more of a problem. For a small software company it could become an asset. Tell customers they are privately owned and small, and therefore won't be acquired by VCs.

Traditionally big vendors were more trustworthy and stable, that's no longer the case.

Edit: I'm not talking about end users, most commercial software is licensed by companies.

Re: VC isn't VC anymore

#196

Post by anildash »

tootie wrote: post #167
BeetleB wrote: post #106

Earlier quoted context omitted.

Indeed. I was once an Andreesen fan (many years ago). I've been trying to like him despite all the negatives for many years, but reading this I just can't any more.

His manifesto was an unvarnished call for corporatist fascism.

Was truly the mask-off moment.

Re: VC isn't VC anymore

#197

Post by anildash »

alexashka wrote: post #130
anildash wrote: post #90

Earlier quoted context omitted.

You should ask Chamath how he feels about empowering workers through unions.

Is that supposed to work? When you get caught stealing candy, saying 'look, he stole more than me!' doesn't work. Were you raised in a human society? I thought people learned these things when they were 7.

If you’re arguing he and I are the same thing, though he’s a VC and spends his time being a podcaster who advocates for the venture industry, and I’m someone who is talking about how power actually works in society, I proposed an easy test of your assertion. Let me know what results you find.

Re: VC isn't VC anymore

#198

Post by chris_marino »

martythemaniak wrote: post #178
chris_marino wrote: post #151

The article does not mention or address an important contributor to the current state of VC. The increase in regulations, post GFC, made it impractical/impossible for small companies to go public. And, until recently M&A was actively avoided. The alternative was to stay private longer offering higher returns for private investors wanting to capture a (previously non-existent) illiquidity premium. The co-dependency of…

I reject that for simple reasons of linear time. The GFC happened in 2008 and Dodd-Frank passed in 2010. Since then, there have been no large, notable regulations passed and Dodd-Frank was watered down a bit in 2018. While Sarbanes-Oxley did make it substantially harder for small companies (market cap Now, you're right that IPOs have grown a lot more expensive over time, but you're absolutely wrong to attribute it to…

Don't want to split hairs here, but SOX was pre-GFC, so I'm not attributing it to only post-GFC. My first-hand experience discussing personal liability with a BoD lasted about 3 seconds. LOL.

Re: VC isn't VC anymore

#199

Post by unknownfuture »

chris_marino wrote: post #192
unknownfuture wrote: post #171

Earlier quoted context omitted.

> The increase in regulations, post GFC, made it impractical/impossible for small companies to go public. Care to be more specific? "Regulations bad" is a pretty common platitude around here but you've stated your main thesis, here, without a hint of support to back it. My observation is that the glut of available private credit has meant for at least 15 years you could just raise funds from those markets, and that's…

Sure. SOX reg sec 302 and 404. Section 302 is a 100% dealbreaker for most companies, so I stand by my 'impossible' threshold. My comment was simply shorthand for all the upfront and downstream costs of going public, combined with fewer exit alternatives. Auditor/directors increased/personal liability, litigious shareholders, time and attention of management, etc. And, to your point, the lower cost of capital from gro…

Except the data doesn't support the claim.

Sarbanes-Oxley passed in 2002 and the number if IPOs climbed between then, in the wake of the dot-com crash, and the GFC six year later, while the median age didn't change much:

https://site.warrington.ufl.edu/ritter/files/IPOs-Age-of-Com...

If your claim was true you'd either expect a decline in IPOs or the age of those companies going up and neither is true during that period.

Now to be clear I'm not saying changes in regulation had no impact. Rather my claim is that regulations plus monetary policy and other macro effects fundamentally changed the structure of the market itself, thereby deincentivizing going public, rather than somehow acting as a break or barrier to IPOs.

Re: VC isn't VC anymore

#200

Post by ivraatiems »

Working as designed? Wasn't "become massively rich by controlling wealthy companies" alwayes the point of capital investment?

What is it that Anil Dash thought the purpose of these firms was?

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