Photo by Neubie from Flickr used under Creative Commons
Reading a lot of TechCrunch and other tech news, I see a lot of venture capital announcements, new rounds, angels, exits, all that.
Having worked at venture-funded startups back the internet-goldrush-bubble days, I’m familiar with that lifestyle, and yes, working at a startup is a lifestyle.
Maybe it’s a function of age or risk-averseness, after several failed attempts at startup glory, but I can’t understand why founders continue to take venture funding.
Well, I get why, for the capital, but I don’t get why, emotionally. My assumptions might be flawed, but if I were pouring my heart and soul into an idea in which I truly believed, I would never want to let it go, not for VC money or for any liquidity event.
This path is increasingly cheaper to follow with cloud-based services and pay-per-use models. Back in the day, a round of $50 million would go mainly into infrastructure. Today, large rounds like that are rare, unless you’re Facebook.
I love hearing about established, privately held companies, still run and owned in large part by their founders, but you just don’t see this in tech very often.
It’s been a while since I lived in Silicon Valley, but the culture definitely supports the serial founder role. I wonder if culture has everything to do with the success of venture funding among tech startups, i.e. venture capital is perceived as the only way to get an idea off the ground when bootstrapping fails.
Anyway, what do you think of the venture model for tech companies? Have a better idea? Don’t mind it? Necessary evil? What route would you go if you started a company today?
Find the comments.
I think this is a fantastic question. The money part of the equasion used to be necessary, but increasingly it’s irrelevant. With the pervasiveness of cheap web services (hosting, CDN, etc), buying hardware isn’t generally a barrier.
For me, it’s about time. Capital affords hiring bright people to help execute on the vision. Without that, you’re on your own, grinding it out in the off hours after your regular job.
I believe in the ideal of doing it without capital, but the reality is that it severely limits the scope of projects you might otherwise be able to tackle (due to lack of time, and no help).
Totally. It’s not an easy problem to solve. The good news is that it’s a common problem, so there are lots of minds noodling on it. I like micro-lending or micro-financing because it keeps the loan amounts or equity chunks small.I suspect new models will form and dominate as founders wish to preserve their vision. This may not be the best thing; guidance and market understanding are areas that VCs can help. Still, at least a chance to fail would be afforded.I think someone will make loads on an ideas/resource match-making service, i.e. connecting people who want to work at a startup or on a side project with people who have ideas but very little money or with ideas that have been abandoned.