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Want to help startups? Just give them money

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Re: Want to help startups? Just give them money

#21

Post by 5l »

swombat wrote: post #16

As someone who is running a business whose main occupation is to help the government give money to tech companies and startups, I actually disagree with this. I think most startups don't need money (and they typically don't get any, because most government funding is match funding, and so you have to spend to get, and very early startups don't spend anything). Or rather, they need money, but probably not from investo…

So the question is: what is the biggest killer of startups? Practicalities (I can't go to this meeting because I can't afford the coffee) or psychology (the funding killed my sense of urgency?)

While I have sympathy for your point of view, as a founder hitting the practical issues every day the idea that all financial support is toxic just doesn't wash with me.

Re: Want to help startups? Just give them money

#23

Post by bruceb »

crusso wrote: post #8
plantedd wrote: post #7

Earlier quoted context omitted.

You're right, it's a difference about the principles of the matter and no doubt we disagree over the government's role (especially in an economic downturn). Setting that to one side though, the truth is that the government is spending your tax dollars already and I'm suggesting that there may be a better way for them to do it.

the government is spending your tax dollars already They should be spending a lot less of them, shouldn't they? http://www.usdebtclock.org/ I mean, what business would ever be allowed to spend money endlessly without thought to income? Why do we let the government do it? Besides, we already have angel funding, ycombinator, venture capital, self funding, debt funding, crowd funding, etc. http://www.instigatorblog.com/…

The gov't isn't a business. If it were it would not be serving everyone. The post office (sorta of a gov't/business half breed) would charge you more to send a letter from Miami to Fairbanks, Alaska than from your town to the next town 10 miles down the road. Gov't has more responsibility than a business.

There are plenty of business with large amounts of debt.

This being said I don't back the proposal.

Re: Want to help startups? Just give them money

#24

Post by PeterisP »

5l wrote: post #14
nemesisj wrote: post #12

In context this is a really strange article. The government bodies listed in this article do give money to startups, and the bar is extremely low. In addition, private investors (angels and angel syndicates) get matching funds "for free" where the public money matches private money. I'm not sure why this isn't exactly what's being described in the article.

The point is rather than these bodies acting as gatekeepers deciding what they think will work or not, funds should be distributed via a lottery subject to some basic criteria. In fact, that is rather the point of the matching funds you mentioned - they let the private sector decide the winners and come in on the same times. That said, there's still a checklist of what sectors they will and won't fund - and it so hap…

If you make it a lottery subject to criteria X, then it will be a profitable "financial startup" business to cheaply make thousands of fresh companies matching criteria X, extracting the "free money" out of the startup ecosystem.

I've seen it many times for various subsidy programs - where a few "entrepreneurs" who learn how to game the system aren't just 'a few bad apples' but actually obtain the majority or even 100% of such programs.

Re: Want to help startups? Just give them money

#26

Post by plantedd »

fmsf wrote: post #22

How come your plantedd doesn't sell shrubberys? You are from the UK, you need to add a special search result for when the users search "shrubbery" http://www.plantedd.com/t/categories?keywords=shrubbery

We have a category just for shrubs here http://www.plantedd.com/t/categories/plants/shrubs, but yeh, our search isn't clever enough at the moment.

Re: Want to help startups? Just give them money

#27

Post by crusso »

bruceb wrote: post #23
crusso wrote: post #8

Earlier quoted context omitted.

the government is spending your tax dollars already They should be spending a lot less of them, shouldn't they? http://www.usdebtclock.org/ I mean, what business would ever be allowed to spend money endlessly without thought to income? Why do we let the government do it? Besides, we already have angel funding, ycombinator, venture capital, self funding, debt funding, crowd funding, etc. http://www.instigatorblog.com/…

The gov't isn't a business. If it were it would not be serving everyone. The post office (sorta of a gov't/business half breed) would charge you more to send a letter from Miami to Fairbanks, Alaska than from your town to the next town 10 miles down the road. Gov't has more responsibility than a business. There are plenty of business with large amounts of debt. This being said I don't back the proposal.

The gov't isn't a business.

Right. Businesses have more direct financial accountability. That's why the government stinks at doing business-like things and I'm objecting to a proposal that thinks government should do more business-like things.

Not sure what your point is with the post office. It's a great example of the government trying to do something that business came along and did ten times better - accomplishing things that the post office said were impossible like overnight delivery.

What's the merit in the subsidizing of people to live in out-of-the-way places? This isn't the 1800s.

There are plenty of business with large amounts of debt.

1X yearly revenue in current debt and 5X in long-term liabilities? Hardly.

People at Enron went to jail for the type of accounting shenanigans that the government considers to be common practice.

Re: Want to help startups? Just give them money

#28

Post by nthj »

michaelochurch wrote: post #9
nthj wrote: post #3

This feels like a One More Level of Indirection solution. [1] The problem, I think most everyone agrees, is that the government isn't the greatest at growing businesses. The obvious, delete-all-the-code approach would be to leave more money in the hands of the businesses by lowering taxes. Or, as the article suggests, we could pile on another layer of indirection: encourage the government to keep taking my money, hop…

The obvious, delete-all-the-code approach would be to leave more money in the hands of the businesses by lowering taxes. I'm a left-libertarian, so what I want to see is a basic income and low levels of regulation. Taxes can be high. I'm fine with that as long as it's spent on useful things (more cancer research, less war). The tax rate we pay in the US is about right. What we get for our taxes is disappointing. We s…

> Before you conclude that I'm an asshole, hear me out. Without basic income, we absolutely need one. But what is a minimum wage? It's a clumsy basic income that's financed by low-end employers. How do they respond? They cut jobs.

I haven't thought through a basic income well enough to render an opinion, but basic arithmetic skills are all you need to realize that minimum wage doesn't help unemployment numbers. We're definitely on the same page there.

[As an aside, my immediate gut-reaction to basic income is that I know a half-dozen people off the top of my head who would gladly just play video games 80 hours a week instead of delivering pizzas, so I am tempted to wonder who would be left to handle lower-end jobs if we had basic income? Not everyone is a workaholic like me.]

Re: Want to help startups? Just give them money

#29

Post by swombat »

mindcrime wrote: post #19
swombat wrote: post #16

As someone who is running a business whose main occupation is to help the government give money to tech companies and startups, I actually disagree with this. I think most startups don't need money (and they typically don't get any, because most government funding is match funding, and so you have to spend to get, and very early startups don't spend anything). Or rather, they need money, but probably not from investo…

Ehhh, I don't know. I mean, yeah, I agree with the general gist of your blog post there, but... For some startups, especially early-stage startups, they do need money...not necessarily big money, but enough money to actually start at all. Or, let me put it a different way, even for the very early stage startups, capital can be very important - in at least some cases. I'm thinking of the bootstrapper scenario, where t…

There are many things that a person can do to liberate their time so they have the flexibility to spend good chunks of flexible time on their startup. Those things (e.g. moving to a more consulting/self-employed type role, not an employee role) also teach that person how to run a profitable business, deal with taxes, cash flow, sales, etc. Having someone else's money in your bank account teaches none of that.

I agree that it is far better to be in a position to work full-time on your startup, but I think it is not so valuable that it is worth taking the downside of raising funds just for that. "Relentlessly resourceful" (to use pg's words) people find the time to make it happen somehow.

Similarly, relentlessly resourceful people make it happen without having to fly to east bumfuck. Shit, in today's world, with all the remote communications available, and the fact that most companies (at least the SMEs) are perfectly happy to do business remotely. And if your business requires you to go to east bumfuck to make sales in person, and you don't have the resources to do so, then you're just doing the wrong business. Pivot to one where you can do the sales remotely, or there are enough clients nearby to sell to.

Re: Want to help startups? Just give them money

#30

Post by mindcrime »

swombat wrote: post #29
mindcrime wrote: post #19

Earlier quoted context omitted.

Ehhh, I don't know. I mean, yeah, I agree with the general gist of your blog post there, but... For some startups, especially early-stage startups, they do need money...not necessarily big money, but enough money to actually start at all. Or, let me put it a different way, even for the very early stage startups, capital can be very important - in at least some cases. I'm thinking of the bootstrapper scenario, where t…

There are many things that a person can do to liberate their time so they have the flexibility to spend good chunks of flexible time on their startup. Those things (e.g. moving to a more consulting/self-employed type role, not an employee role) also teach that person how to run a profitable business, deal with taxes, cash flow, sales, etc. Having someone else's money in your bank account teaches none of that. I agree…

Sure, and like I said... I know it's possible, because I'm doing it. And as much as I'm opposed to overly focusing on raising money[1], I can certainly see how some entrepreneurs would be better served to go ahead and raise money - at least some small amounts - earlier.

One reason, among others, is the risk of missing an opportunity because you can't move fast enough to capitalize on it, due to lack of resources. For most of us, there is competition out there, and if they're moving faster, capturing mindshare and establishing their position in the market, it could be pretty damaging (psychologically, if nothing else) to not be in a position to respond.

[1]: http://www.fogbeam.blogspot.com/2013/03/the-point-of-startup...

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