[michaelochurch]

These venture-funded startups make a mockery of the concept. After all, if you're a true entrepreneur, are you really going to waste 6 months of your life asking a fucking venture capitalist for permission to be a founder? The VC-funded game is just the same private-sector social climbing that a previous generation called "the corporate ladder".

The real problem, the 9500-pound chain-smoking and belching elephant in the room, is that almost no one can bootstrap because the U.S. middle class is nearly gone and almost no one has any fucking money. In the 1960s, with strong unions and low housing costs and cheap health insurance that covered everything, worker bees actually could save up and have starting capital. The Satanic Trinity (housing, healthcare, and tuition) that is now killing the middle class wasn't even on the horizon, so people of average means had a real shot at starting their own ventures-- without having to get permission from a bunch of effete Sand Hill Road bureaucrats.

Add to this the obscene cost of living in Silicon Valley. Even the people with supposedly well-paid corporate jobs can't afford to buy houses. The only real way to make money in the Valley: be a landlord. Whenever entrepreneurship revives on the North American continent, it will be far from the tapped-out, overpriced, landlord's paradise wasteland of California.

Ok, so on to the finding itself... I agree. Most people who launch successful businesses had to learn on someone else's dime and risk before they had the capital, skills, and domain knowledge necessary to go on their own. It's pretty rare that a 22-year-old, fresh out of college, has (a) the leadership skill to create a business from scratch, and (b) insight into a real-world problem that can actually be made into a business. These VC darlings aren't true entrepreneurs and shouldn't be taken as typical; instead, they're rich kids whose parents are laundering family connections so it looks like their underachieving spawn are "startup wunderkinds" instead of well-placed halfwits that Wall Street didn't want.

[gfodor]

That's just, like, your opinion man. You seem to be focusing on the glitzy veneer of the Sand Hill VCs and ignoring the fact that new capital intensive businesses almost always involve seed investment, be it from friends and family, or venture capitalists.

In either case, it's almost always a good idea to use other peoples' money instead of your own. Particularly in environments like the current one where you can get money without giving up ridiculous amounts of equity. You're undermining your ability to have a few failures to learn from if you put all of your personal assets on the line in one venture.

If your main complaint isn't VCs per se, but access to VCs, then sure, that's a fair argument. But arguing that somehow we'd be better of if people were risking massive amounts of their personal capital on their startups (vs what we have now where the risk is split between them and others who can afford it) seems wrong. Even the founders who do have money aren't so dumb as to turn away VCs out of pride of being a "true entrepreneur" if the terms are favorable.

[michaelochurch]

In either case, it's almost always a good idea to use other peoples' money instead of your own.

I agree. You used to be able to get bank loans on co-investment (i.e. you put up some of the capital). Now they require personal liability. Things have gone to the worse.

You're undermining your ability to have a few failures to learn from if you put all of your personal assets on the line in one venture.

True. But in a time when (a) bank loans were available with co-investment alone (not you're-insane-if-you-take-it personal liability) and (b) people in the middle class actually had money, it was possible to get going while only putting up 5% of the seed money (and getting a larger equity disbursement, because you actually are doing the work on a low salary).

But arguing that somehow we'd be better of if people were risking massive amounts of their personal capital on their startups (vs what we have now where the risk is split between them and others who can afford it) seems wrong.

I agree. My point is that, before the VC era, people didn't have to risk massive amounts of personal capital. A 5% co-investment, and a willingness to work on a lower-than-market salary for a while, was enough to get you in the game.

Even the founders who do have money aren't so dumb as to turn away VCs out of pride of being a "true entrepreneur" if the terms are favorable.

Fair. It's not that all VC is bad or should be turned away. It's that a 6-month permission-seeking process discourages most people who have the entrepreneurial spirit, favoring social climbers.