It's not really a secret that angel and seed funding has been steadily dropping since the mid-2010s.
With that said, I think that @brenden2 is overvaluing funding. Most people around here build software -- which can be easily bootstrapped. For those in hardware/biotech/energy/etc. it's much harder to get out an MVP without funding.
Overall I see the availability of seed funding as still quite high.
Very much agree with your last point about overvaluing funding. It's never been easier to bootstrap something for a year or two. Get an actual product working, maybe have a few users, and then go for funding to scale up. We see this in the data too with median company ages at the time of seed funding rising.
Generalizations based upon experience are perfectly valid when the market is not flat.
I suspect that there is lots of capital washing between insiders and very little outside the bubble.
the problem with statistics is you have to look how it's being used to figure out if you've got something lower than a damned lie or higher than an expert opinion. Which requires work and expertise of its own.
If you consider all the money thrown at unicorns ... maybe.
The $15-70 million range has been a desert for the past 4 years.
Everybody wants the unicorn or the $1 million 100x exit.
On your second paragraph, you may be amused to note that a popular theme in Matt Levine’s column is that “private markets are the new public markets”.
This story doesn’t add up.
1. VC funded company operates at a loss.
2. All incumbents are pushed out of market.
3. VC funded company has monopoly. They raise prices above the original “competitive-profitable price”.
4. New company enters market at original price.
5. VC funded company goes to the original price or goes bankrupt.
6. Anddd, we’re here again.
Note that often this low price for internet companies is 0 and many users will not put up with any price increase, so the VC backed company will fail once their monetisation strategy ( usually it’s “something something advertisers”) doesn’t pan out.
A small profitable business is harmed by the unsustainable competition at steps 1-2 and may struggle to hold out until step 3 (which likely won’t happen; going bust/being acquired and shuttered seem more likely to me) or 6
That’s just a better company.
Companies that have enough market power to crush smaller competitors tend to also drive the quality of products down. I’d prefer more high quality products to fewer “better companies”.
I’m responding to OP.
>> there is so much vc money sloshing about that one is constantly fighting competitors who operate at a loss to try to build monopolies
He’s claiming that VC companies use their warchest to undercut and ultimately force out incumbents.
> Most interesting companies aren’t building commodities like toothpaste.
Why is price less relative for “non-commodity” companies?
> Companies that have enough market power to crush smaller competitors tend to also drive the quality of products down.
Maybe? Peter Thiel talks about small margins in competitive industries leading to lower quality products because companies lack sufficient resources to innovate. eg, Google’s advertising domination lets them build high quality products like GMaps and GMail.
Another bigger problem is that the monopolist pushes the low cost of delivered goods or services on third parties (see the gig economy). That race to the bottom harms people, but there will always be takers for those jobs in any society without a good social security system.
Off-topic but do you have a recommended starting place or other ideas? I did well with some short positions recently but would love to explore more strategies.
It’s never been this easy to start a thing. Build stuff, get some users, see how much they pay. Then go from there.
Most funded startups these days just feel unnecessarily bloated. Over engineered, over staffed, building run-of-the-mill boring stuff you could slap together in a couple afternoons using 3rd party tools and some glue.
It doesn't really matter that I've done well on my own, or that I've been privileged enough to work at a few successful companies. You need either a lot of Twitter followers or a big name VC backing you before anyone will take you seriously.
Who is "they" in this case? Customers? Investors? Recruiting candidates?
In any case, I don't think this is true.
Customers don't buy a product because of who created it (in the vast majority of cases). They buy because it provides them value. Build something valuable and you'll get customers.
Once you have customers via creating something valuable, you have revenue, growth, etc. With this you can win over investors, recruiting candidates, heck even other potential customers.
Social proof might help a little, but probably not as much as you think.
If you want to start a company, you should get good at it.
Convincing founders to give you money, finding employees and convincing them to join you, marketing or selling to customers are very important skills. But they are fairly diverse and I don't think there is a lot of overlap in the skill sets.
Even just something like "market to customers" can require very different skills depending on your budget, target customer, market segment and could involve such diverse skills branding, networking, inside sales, outside sales.
I think you're right they're very important but I think devs tend to way overestimate the overlap and underestimate how deep and diverse the knowledge bases are.
Another way to think about it is: by writing comments like the one you wrote above, about the unfairness of it all, you're already marketing. You're just doing it badly.
I don't want to sound like I'm picking on you, because this is an incredibly prevalent handicap among smart tech people.
I've lost hope on the Silicon Valley dream and decided to just use my big brain to make money in public markets, which is surprisingly easy given how much effort the government puts into pumping up the stock market.
I used to think YC was great, I applied several times, but YC doesn't really represent what it used to anymore (to me at least).
Just my 2 cents.