[tommo123]

I can't find the link but wasn't there an article, either by Ycombinator or about Ycombinator, that directly contradicted this article. The gist of it was that a VC firm isn't really looking for already-profitable companies that can assure a nickle-and-dime cut of steadily-increasing revenue. The idea is to invest in 10 companies with a high-risk margin, and the one company that (statistically) takes off will earn such incredible revenue, magnitudes greater than any reliable and stable business could hope to earn, and that will pay for the investment lost on the other 9 which, being high risk, will not make a return. The underlying philosophy was that if it seems like a stable, reasonable business idea, then anybody and everybody could have, and would have, thought of it already, and the potential for fantastic growth is just simply not there. They'd rather pay for someone's quirky, crazy startup on the 1/10 or 1/20 chance that it will take off, as the return from that will be so great that it can pay for itself, pay for the other failed high-risk investments, and then keep on paying.

[josephlord]

I don't see the contradition between the articles. It says why VC's do OK when startups go for the big time but that it isn't always in the companies interest.

I think it should also depend on whether you have genuine (low acquisition cost) exponential growth. If you can show that growth I think funding should be possible without revenue and riding the growth might be worthwhile but if not you really need to be about alternative approaches.