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Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

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Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#21

Post by tosseraccount »

delecti wrote: post #3

It's really weird how this article tries to frame the situation. It's almost like the startups feel entitled to the funding. The point of funding should really be to enable faster growth than they might otherwise have been able to achieve, but if a business can't at least survive without huge influxes of investments then is it really a business that they should be investing in in the first place?

"The point of funding should really be to enable faster growth"

The point of funding is to generate a return.

Hopefully more than you can get from CDs.

Good investments are often a very long term proposition.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#22

Post by freyr »

mindcrime wrote: post #19
delecti wrote: post #3

It's really weird how this article tries to frame the situation. It's almost like the startups feel entitled to the funding. The point of funding should really be to enable faster growth than they might otherwise have been able to achieve, but if a business can't at least survive without huge influxes of investments then is it really a business that they should be investing in in the first place?

Here's the somewhat ironic "catch 22" to the whole thing: If you're a startup and you don't take VC funding, then you have the luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company. Well, as long as you can do that in the face of competitive pressure. Strictly speaking, unless it's a "network effect" situation like a social network, you probably don't need to grow fas…

> unless it's a "network effect" situation like a social network, you probably don't need to grow fast.

Uber seems like a weird example of this. It was said (and remains said) that they're operating in a winner-take-all space, and they expanded as if they were a social network.

Despite the aggressive expansion and marketing, a majority of people I know in the Bay Area now use Lyft exculsively. The last few times I've said "I'll get an Uber," somebody's actually paused and said "Wait, why don't we take Lyft?" I'm not even sure why. When asked, they just reply that they don't like Uber for some non-specific reason.

They're expanding around the world and into new products and concepts, but haven't even seemed to nail down a loyal customer base on their home turf. Anecdotally speaking.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#23

Post by woah »

cubano wrote: post #16
tariqali34 wrote: post #5

Earlier quoted context omitted.

Many of these businesses may make better sense as "non-profits", out to improve the welfare of the general community and funded purely by donations. I'm not sure whether donors would appreciate writing fat checks for programmers/managers/etc., but it's clear that a "hockey stick" growth could lead to a immediate path to monetization (if people know your name, you can capitalize on it when you're doing fundraising dri…

Are you kidding me? Almost all VCs aren't interested in "non-profit" and "welfare of general community." They want hockey-stick ROI and unicorns. I know this may be the wrong forum to say this, but let's get real...VC are in it for the money, not to make a social impact, and the last thing most of them are interested in is playing welfare daddy to a bunch of tech nerds.

I think you should re read what you commented on.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#25

Post by cenal »

cm3 wrote: post #24

Or they could diversify and invest in more projects with smaller sums, couldn't they? Would probably require more people to manage the increase of investments.

Valuations are out of whack. They are smarter to sit back and let the unsustainable ventures die out and then invest in the viable ones after things level out.

I mean, even a touch screen toaster that costs $1,500 got invested in. Who is going to pay $1500 for a touch screen toaster? http://www.juneoven.com

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#26

Post by hoodoof »

lvs wrote: post #10
hoodoof wrote: post #4

Investors market. Tighter conditions, preferences, ratchets.

Words. Punctuation, plural nouns, haiku.

Sunshine. Invest. Rainbows. Unicorns.

Heat. Fire. Cash burn. Bears.

VC. Lower valuation. More Power. Liquidation preference, contentment.

Entrepreneur. Panic. Sellout. Fantasy. Donkey, bulls, credit card.

VC. Rich. Beach. Downturn, Upturn, Cycle. Ratchet, racehorse.

Ramen, caviar, yacht, walk, laugh, cry.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#28

Post by zzzzzxxxxx »

mindcrime wrote: post #19
delecti wrote: post #3

It's really weird how this article tries to frame the situation. It's almost like the startups feel entitled to the funding. The point of funding should really be to enable faster growth than they might otherwise have been able to achieve, but if a business can't at least survive without huge influxes of investments then is it really a business that they should be investing in in the first place?

Here's the somewhat ironic "catch 22" to the whole thing: If you're a startup and you don't take VC funding, then you have the luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company. Well, as long as you can do that in the face of competitive pressure. Strictly speaking, unless it's a "network effect" situation like a social network, you probably don't need to grow fas…

I think most readonable people get this. However, it is the SUV problem.

If you don't need an SUV you don't get one. However it is convenient to have at times and the downside is may be worth it. Also, they provide you with better protection...from all the other people who buy SUVs and this increase average tonnage on the road.

Networks are inherent in every business and the world is global.

I am not saying don't think about VC money, but there is no reason to suspect you can't get decent alignment. It is mapped pretty well to the success/need of the company. Smart helpful investors will be there (along with dumb money) for revenue positive companies.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#29

Post by erikpukinskis »

mindcrime wrote: post #19
delecti wrote: post #3

It's really weird how this article tries to frame the situation. It's almost like the startups feel entitled to the funding. The point of funding should really be to enable faster growth than they might otherwise have been able to achieve, but if a business can't at least survive without huge influxes of investments then is it really a business that they should be investing in in the first place?

Here's the somewhat ironic "catch 22" to the whole thing: If you're a startup and you don't take VC funding, then you have the luxury of simply enjoying organic growth and funding expansion by re-investing profits into the company. Well, as long as you can do that in the face of competitive pressure. Strictly speaking, unless it's a "network effect" situation like a social network, you probably don't need to grow fas…

> there is pressure to grow fast, but it comes from the investors and not from the market per-se

I don't even think the pressure comes from the investors per-se, it comes from the capital investments you make which necessitated the funding. Excess staff, buildings, tools, etc, all have ongoing costs and also depreciate in value. You are by definition building out excess capacity based on a growths model. If sales don't keep up, you become insolvent.

Re: Valley VCs Sit on Cash, Forcing Startups to Dial Back Ambition

#30

Post by sjg007 »

cenal wrote: post #25
cm3 wrote: post #24

Or they could diversify and invest in more projects with smaller sums, couldn't they? Would probably require more people to manage the increase of investments.

Valuations are out of whack. They are smarter to sit back and let the unsustainable ventures die out and then invest in the viable ones after things level out. I mean, even a touch screen toaster that costs $1,500 got invested in. Who is going to pay $1500 for a touch screen toaster? http://www.juneoven.com

It will sell. It's just the beginning of the IoT revolution.
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