[tptacek]

Companies with 10% growth Y/O/Y fail all the time. A portfolio of 10 of those companies will consist primarily of failures. Most of the companies in that portfolio will cease to exist without returning money back to investors. By your own definition, none of them will grow explosively, and so the winners can't pay back the losers. Pick a success rate and an investment multiple for the winners and do the math.

Banks do fund businesses like this, all the time. The difference is that they fund with debt instruments, not equity. You're obligated to pay them back and can't deliberately manage your business to avoid the obligation (chances are, you'll have to co-sign the obligation personally).

If all you're arguing for is broader availability of lines of credit, by all means, keep asking for that. But that's never been what startup investors provided.

[logicallee]

I defined what I was arguing for: more checks written to startups that are already printing money and raising their first round.

In 2018 more than 1,800 startups are fantastic equity investments at a time when they're printing money, and VC's are idiots for writing 1,800 first funding round checks to startups total, nationwide. I couldn't believe how low that number is. You said, "well yeah they're printing money but it's the wrong kind of money". You would have called Airbnb the wrong kind of startup and you would have stood there and told me VC's are totally right not to invest in them. 9 years later here we are, $31B+ valuation.

It couldn't raise its seed round and it's obviously because VC's are idiots who are paid to lose money. It sold cereal on national TV instead. That's a fact.

[tptacek]

No, Airbnb was self-evidently not the wrong kind of money. It was unclear whether Airbnb could succeed, but if it did, it was obvious how it would make truckloads of money. It’s practically the archetype of a shoot-the-moon business model.

[logicallee]

why isn't the fact that they're printing money on that model proof that they can succeed in that model?

[tptacek]

I think we're talking past each other. I brought my company up as an example of "the wrong kind of money" because we're a services company, and no matter how much money we're printing today, we're unlikely to liquidate for 10x forward revenue. Airbnb, on the other hand, has a business model that can do that.

[logicallee]

OK. I had thought you brought it up because you couldn't land any funding despite being able to generate great returns. Actually your example is orthogonal to startups that can't raise money for their big plans.

My original point was just that VC's don't write enough checks. thanks for the exchange.