[RantyDave]

Unpopular opinion: if your company is going to succeed, why do you need VC? Sure, (nearly) every really really big company pulled VC at some point, but this is an industry full of survivor bias - and VC's know full well that almost all their punts are going to fail. VC is, arguably, the most expensive money you will ever borrow. If you could borrow a couple of hundred K against, say, obscene house prices in San Francisco it would save you multiple millions down the road.

Unpopular opinion: if your company is going to fail, you need VC money. This, to me, is one of the biggest problems facing our entire industry. The 1/20 that succeed have to carry the 19/20 that want to be cool and have bean bags in their office.

The (smaller) VC's have to, ideally, find that little narrow gap between a self-funded startup starting to "go" and the time when the founders decide they can live on a quarter million a year and be just fine. To be frank, it sounds really hard and I don't envy them the task. But they do get to charge 2% for doing nothing and I could do with some of that :)

How can we create a VC industry that's focussed on more, smaller wins? Perhaps a focus on recurring dividends? Or does the math work out that there is simply no point because the big wins are so, so big?

[rapnie]

Fully agree with your unpopular opinion :)

> If your company is going to succeed, why do you need VC?

It's not just the VC but also the definition of success. Nowadays I see this mostly defined as being able to scale up quickly to - preferably - millions of users, and raking in loads of revenue in short time.

But why not have modest goals in mind to define success? Get decent, normal salaries for the initial team of employees, instead of striving to become rich. Then grow slowly and steadily.. you won't need VC at all that way, if you plan things right.

Scrap the word 'disruption' from your business plan. It originally had a negative connotation anyway. Go for sustainability in the holistic meaning of the word..

(PS. I like the use the term 'anti-disruption-layer' in these modern times.. trying to create one)

[DataDisciple]

I'll follow your unpopular opinion with another unpopular opinion... since the focus is typically on technical founders, you are essentially starting a business with individuals who have little to no business training. Not understanding the basics of finance to manage cash flows and allocate resources makes it much more difficult to get to profitability. But that is fine for VCs, as they really don't care about profitability.

[cwilkes]

But if you borrowed against your house you are liable for the debt. With most startups failing you are going to be on the hook. So the risk is losing your house vs making $1M more on $20M that only has a 1% chance of succeeding.

[jackgolding]

In my small experience researching banking before this big VC boom in SF (I wanted to work in VC) I don't think chasing sustainable small wins is the name of the game (see traditional VC companies like bio-med.)

I wonder how much of getting VC money is just wanted to be in SF where all the customers are (if you are selling to startups anyway/tech b2b anyway) and pissing it all away on rent?

I think the biggest thing the Government can do in Australia anyway to help these smaller wins is promote VCs to invest in companies outside Sydney and Melbourne. You could do this by providing fibre, airports, easier local gov tender process...

[ggg9990]

In general, borrowing money is useful and rational in many types of business growth. VC is correct in the situation where there are “winner-take-most” dynamics and where investment today creates a long-duration profit stream. Things like Facebook are perfect for VC - it’s useful to keep the site ad-free in the beginning to gain as many users as possible, and once you have all of them and nobody can enter your market, you ratchet up the ads. VC is what pays for everything in the interim.

[toddmorey]

All ideas I think have a scale where they perform best. Some ideas do require starting capital of $10m or more to really work--VC there may be the best option. However, I've seen too many companies fail by taking on too much money too easily, forcing success to mean many times the multiple that's likely or even possible.

[jchonphoenix]

Say for example, your company needs about 1 million users before you can start charging any type of meaningful advertising dollars. Additionally, there's this virality affect that gets those 1 million users to get their friends on your product, so things will start to take off quickly, and then viola! You have a moat.

Only rub is, until you hit 1 million, you're making essentially $0. And that'll take lots of time, people, and servers that all need to be paid for.

Welcome to the social network.