21–28 of 28 posts
I'm curious why Fred Wilson would proclaim to the world that investing in his VC firm isn't going to give you the return that you're looking for these days. Is there a short term gain for him that I'm not seeing? Or is Wilson genuinely trying to change an industries path with a few words of wisdom? I'm not suggesting that his advice is bad. It seems to make sense to me.
VCs are not too big, they are (apparently) investing in the wrong companies. If humanity overall wins out, the next 20-30 years will see industries we can barely imagine grow to maturity. From electric driver-less cars, to new forms of power generation (even fusion), new building methods, new education, and vast mega-cities will spring out of nowhere. In the West, in the rest of the world, we will see vast demand for…
Being 31, growing up when I did, sometimes the things discussed in TED, and the wonderful future you allude to, seem like flying cars. And not to be down on you, or the future in general. Maybe this is a side effect of growing not only when I did, but where, being in more rural Georgia. Or being "not an optimist". That all aside, power storage really does seem key. Imagine if electric cars could be refueled by an eas…
To be less of a dick: I did put in a caveat of "if humanity wins" - my sort of catch-all term for avoiding the collapse of a global civilisation that arguably has been in existence since, well, Gutenburg, or possibly Newton.
But the idea is that the available-at-one-point-to-one-socieity-sum of human knowledge has been only expanding since a given point (the burning of library of Alexandria would count as a net loss of knowledge so it does not go far back this idea), and that if it is to keep exapnding we are going to solve something. Maybe cancer, maybe flying cars. Maybe something else.
But there are only two directions - up and down. I am hoping for the up. I can understand the doubt. We humans are real good at screwing it up. But ... I think the scientific method is permeating enough societies that even if Western world collapses, India, Brazil etc are likely to be independant civilisations themselves. (I have had pleasure of working with many Indian natives over here, and their generation is going to want some serious changes back home.)
Can one start a tech company anymore without Venture Capital?
Yes :) . Depending on your definition of tech, of course, there are several bootstrapped companies. Some examples include Github, Imgur, Carbonmade, 37Signals, Braintree, DuckDuckGo, AppSumo, Atlassian, Envato, etc, etc... There are also other sources of funding (ex: StartupChile), and that's not even counting angel investors.
On a related note, I would consider companies that are bootstrapped by fairly wealthy individuals/angel investors to be a separate class. They're still often backed by former founders of successful startups that had exits (so in some sense, they were able to fund their startup because of previous venture money).
An interesting question is how many companies are founded by individuals with next-to-no capital and take no venture money at any point in their life cycle. It's a different question from the one that GP asked, but it's a far better metric for something we like to pride ourselves on in the tech community: mobility/meritocracy.
We're definitely in a different place than we were in the 90s, when venture money was needed even to get basic server access (today we have plenty of IaaS/PaaS/SaaS companies that reduce the costs). Now, it's possible for someone to create the beginnings of the next Facebook on a student's budget. But that's different from being able to create the next Facebook on a student's budget (ie, without taking any venture money).
I agree that there are still examples even with my stricter critera; they're just less common at the moment.
Earlier quoted context omitted.
That the return (assuming no sale at top of a bubble) for the best companies in the biggest industry of 19C was only 5%-10%. (Based on equity, it seems Harford did not calculate dividend return which may make a difference) Making 15-20% without an exit is a great deal - supporting I think your point.
Indeed, I agree. I'd be curious to know how common was the use of debt during that period. 5%-10% is a good return on an unlevered asset, debt could provide an additional turn - then, I don't know how the Kd and CPI was during that period.
Is that what you mean - or derivatives?
Earlier quoted context omitted.
Indeed, I agree. I'd be curious to know how common was the use of debt during that period. 5%-10% is a good return on an unlevered asset, debt could provide an additional turn - then, I don't know how the Kd and CPI was during that period.
During the 19th Century, U.S. railroads relied primarily on debt issues to finance their growth. This policy contributed to major financial crises (www.biu.ac.il/soc/ec/wp/16-01/16-01.pdf) Is that what you mean - or derivatives?
Can one start a tech company anymore without Venture Capital?
Earlier quoted context omitted.
For VCs. Just VCs.
For most of them, it won't matter what the return 10 years from now is, they are cashing out much sooner
So what will the market decide? I have no idea.
But if the ex-Netscape/LoudCloud types can return good money to their investors, they will be trusted with more money. And this should continue. If they don't, the funding will dry up soon enough. The invisible hand will guide this, so there is no need to intervene. If 200 funds investing X dollars is better than 20 investing 10x, the returns will show it. If the status quo is somehow a disservice to innovation, then it becomes a national R&D funding issue rather than a VC issue.