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Daniel Ospina
@danielo
Startup fundraising is broken. When you ask most entrepreneurs what they want, you'll get something like "build a great company", "make good money", "make the world better" and "have the freedom to work on what I like". I ask them, would a $100 million company make you happy? The answer is often yes. If I ask them, would you trade that for a significantly smaller chance of it becoming a $10bn company? the answer is most frequently no. For most entrepreneurs, a 100mn company is already a great company, freedom, positive impact, and great money. Taking additional risk and making extra compromises to get a chance to go to 10bn is just not appealing for most. It's not about talent or ambition, I'm talking here about talented founders, many of whom go to create solid companies.
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Daniel Ospina pfp
Daniel Ospina
@danielo
Yet, that's the wrong answer for most investors. If these founders want to raise, they need to lie or make a choice they dislike! Most investors out there only fund billion dollar opportunities. Most of their bets will fail. Only a lucky few founders will make it really big to carry the weight of the whole portfolio. For most startups, VC funding is statistically speaking a suicidal bet. Most would prefer something else. We've been psy-oped into believing this is the only way a fund can get ROI. But that's just not true! there are examples like the Calm Company Fund and Tiny who have proven this. I believe we've seen peak VC. Too much capital was allocated to moonshot bets, and we have left a whole generation of founders with very limited choices, leading to a lot of frustration and ultimately poor ROI for investors too. Trying to fit a square peg in a round hole has never been a good strategy.
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links 🏴
@links
Note that a $100M company is likely doing $10M/yr in revenue. Most first-time startup founders don’t realize this either. I find if I ask them to describe the company (ie number of people, how much money they make, etc), they usually end up at a $10M/yr business. VC has turned into the only route that founders consider, but grant/bootstrap/angel are also options
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Trigs
@trigs
It's so true! This is why I love the public goods ecosystem, and why I think we're heading into a new phase of funding options. Micro-investment accelerators like RnDAO and @orangedao are gonna change the game for small startups! Excited to see @octant going this direction as well!
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