DISQUS

TedHoward · 8 months ago

I've run through essentially the same logic to explain why some new industry is about to explode in funding. Unspent VC money is like a massive pressure building up, just waiting for a way out. When it finds a way out, it's likely to escape with an impressively large flow. If you can get in front of that flow, it will propel you far.
It's good to have my thinking validated like this. If I had to bet, my money would be on green tech, but I'm neither seer nor VC.

Nicolas · 8 months ago

About Internet companies, as the head of a company working with a lot of startup, I can tell you that most of our high growing customers do not have VC funding (no access to it, nor will to get it). They are growing at over 100% per year (revenues are in millions or tens of millions) so we are not talking about very small business.

You are right: some would benefit from some sort of funding but usually they are too profitable to accept it.

Chris Yeh · 8 months ago

Furqan,

I definitely agree that it has gotten cheaper to get started. It still is the case that companies do need capital to reach scale, but the fact that most can achieve initial traction without a true VC investment changes the VC game.

The goal is not to fund a good idea, but to position oneself as the best provider of capital, often based on non-financial considerations.

fnazeeri · 8 months ago

Yes! Even just a few years ago it would take several million dollars to "built it" (the Series A) at which point you could tell whether there was a market for the product/service (which you'd scale with a Series B). Today you can "build it" with a few hundred grand or less. While you still need money to scale, you have options like selling for $5-20 million and avoiding VC altogether. There is obviously still a need for VC; just not necessarily in the same form/fashion as in the past.