I think I'm missing something. Yes, the VC industry has massively funded many companies. Some of those are not profitable. Some of those are even not viable. That's not a good thing. Maybe we would all be better off if funding was generally better allocated towards viable companies.
Well, on the other hand I worked in a company which lived for about 14 years of such VC money. They never made profit and all VCs got mad. But I, as an employee, got paid a handsome amount of this money and I guess I'm not the only one.
So I can understand that some people think VC money is for the founders.
Honestly? I don't buy it. The VCs are the ones that have been pouring cash into these companies so they can blow it on obscenely expensive parties and offices. I think they're just trying to deflect criticism away from themselves and onto the startups.
I mean, there have also been plenty of startups in the past that have blown money and built a product that nobody will pay for. And VCs just pour more cash in.
Maybe a bit OT, but when I read articles like this, I look at the VC scene here in Europe and feel sad. It's hot here (amongst MBA types) to be able to say that you're affiliated with a VC-, 'innovation-' or 'seed' fund (leaving aside that many of these are funded at least in part themselves by public money) but the sort of talking in this article is widely foreign to the type of people who typically get the reigns in such organizations. Over here, they don't see 'founders' as such; tech people or people who actually build things for customers are seen as commodities who just execute simple rote tasks and who are really just employees that don't need to be paid a salary until the point the company is bringing in money and then they get paid (x years times double or triple median salary). 'Liquidity event' for founders in an investment round? They'd look at you as if you had gone nuts if you proposed something like that over here.
(again sorry for OT and the above may come from observation bias - I'm just bitter today I guess ;) )
I know this isn't the point of the article by any means, but the first sentence (Raising millions of dollars from VCs is still the tech entrepreneurs’ dream.) bothers me a bit. I don't know about anyone else, but my dream is to run a profitable company, and how I get there has no bearing. Am I in the minority here?
VC funded companies aren't some tech billionaire funding a cool new project.
VC funded companies are investments that they want a return on. It shouldn't be surprising when people try very hard to protect that investment to help them get a better return.
I have worked for 15 years in tech (in the US) and hardly ever worked at a "VC-powered" firm. All the companies I worked at were cash flow positive and payed a lot. Bulk of the compensation came from stocks specially for senior levels. So there must be something else going on here rather than just "VC-money".
I hope every VC is lobbying for this. What's the point in investing in tech if the market is full of big fat gorillas that will just copy everything you do and put 10X the capital behind it, not to mention hiring everyone at 10X the salary a startup can afford to pay.
Most of the people who actually put work into it don't make their money from profits. Their salaries are paid. Plus, these companies basically burn VC money to starve competition.
Maybe it's just me as I'm just a developer in europe, but I don't get the VC world at all.
reply