VC Funding Critique

https://www.youtube.com/watch?v=EMtmnLWL79oThey've received VC funding and now they have to make lots of money for their VC bosses. Therefore, they will do almost anything.

This looks like a particularly egregious case of the toxic influence of VC money. Whey build a sustainable platform from day one when you can use the free money tap to attempt hypergrowth. Unfortunately, eventually it runs dry, and you have to justify your valuation based on whatever you did manage to build.

Here's the problem: most VC firms understand that 9/10 investments will fizzle out or make modest returns. 1/10 is the unicorn, the 100x. Everything depends on finding the unicorn and growing it like a weed, so every investment has to be treated like a unicorn - grow fast grow large NOW NOW NOW - whether it's actually beneficial for the company or not.There's so much money sloshing around in the valley that when stupid apps that make no money like Yo or Yik Yak get en

Can you blame them for wanting to make money? In some sense they're victims of the VC funding cycle. "Spend billions and figure out how to make money later" has never been solid ground to build a company on, even if a couple of unicorns have pulled it off.Is there a way to get the adoption necessary as a bootstrapped product that knows how it's going to make money from day one?

Sort of. There's a class of startups that's not meant to be profitable, except maybe by happy accident. Many (most?) tech startups are like that now. After all, the investors don't care about creating profitable companies - they just want to make money, which they're positioned to do in many ways. One of them is to help create profitable companies. Another is to help grow companies to be sold to other companies and/or to the public for maximum value, giving the in

Nobody is going to invest in startups like that. The startups that get bought and the product shelved, those are the successes for the VCs, incubators and other investors. The startups that steadily build up a product with a decent user-base, eventually making a small profit after several years, these are the failures, and are subsidised by the 'successes'. The big players aren't that interested in buying products: an existing product is just baggage, and one that they are forced to maintain eve

Yes, this is the inherent issue at play nowadays. Investors are throwing silly money at startups in an attempt at global domination. What then happens is that the start-ups rely on pricing at a loss to get the majority market share and absorbing the loss through their silly money funding. End result is that simple business models end up getting destroyed because the customers are now sensitive to any price hikes above the loss making prices. The funded company now has to pursue a mish mash of mo

The mistake in that article is the assumption that these companies collecting those gigantic VC funding rounds are looking to stay ahead of the pack and be there even 10 years down the road.That's a fundamental misunderstanding of the (especially) US startup culture in the last maybe 10-20 years. Only very rarely is the goal of the founders and angel investors to build an actual sustainable business.In most cases the goal is to build enough perceived value by wild growth financed by V

Wait what? If company don’t make $ it don’t survive?HN could really elevate the discourse if they flagged the submarine ads of VCs

No, it's just that growth necessary to satisfy VC investment is unobtainable so solid products eat themselves attempting to achieve that growth.