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by danieltillett 3748 days ago
There is a real gap in the market and it is not limited to just hard tech. There are an enormous number of great businesses out there that can’t raise funds until they have a product and they can’t make a product without funds.

The solution is actually pretty obvious - investors have to start investing in businesses that are nothing more than a good concept, especially those of outsiders or non-serial founders. This is hard work though.
2 comments
pjlegato 3748 days ago
The issue is that the risk of investing in a startup is extremely high even if you do limit investment to serial founders or post-product, post-traction businesses. It's already very hard to generate a positive return even with those conditions, and impossible to tell with certainty which will work out.

Investing in random unproven founders with no product or traction (apparently) makes it practically impossible. Even fewer will work out than in the pre-screened batch, and the hit rate is already close to zero.

If it were at all possible, there would be no need for VCs at all. You'd just fill out some forms about your idea and then do an IPO.

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danieltillett 3748 days ago
Do you have any evidence that the hit rate would be close to zero if you invested in founders with just a concept?
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pjlegato 3744 days ago
Yes. Y Combinator, which (very unusually) funds people with no track records and just a concept, has had only two really big successes (AirBnB and DropBox) in 11+ years and close to a thousand companies in the program.

http://yclist.com/

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eldavido 3748 days ago
I've been thinking about this a lot recently.

I think the answer is to become a serial founder. Elon Musk's career is a good model for this. He started with some kind of media/software company and then took on harder and harder challenges as he gained credibility.

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