Re:Ask HN : Where Does VC Money Really Go?
by rscale on Monday October 17, 2011 @01:23AM
(#3119280)
1) People. People are incredibly expensive.
2) Promotion. Especially in winner-take-all markets, where it's especially important to be the first player to reach scale, and in markets with high customer lifetime values.
3) Capital expense. Sometimes a business model requires huge warehouses (amazon) or massive R&D, or some other huge capital expense that serves as a meaningful investment.
4) Acquisitions. Sometimes it's spent buying other companies to help achieve goals that they might not otherwise be able to achieve in the required timeline, using only internal resources.
5) Miscellaneous. Accountants, lawyers, bankers, travel, telecom, that great domain name, hosting, internal infrastructure, SaaS products, conference attendance, catering, and other miscellanea.
2) Promotion. Especially in winner-take-all markets, where it's especially important to be the first player to reach scale, and in markets with high customer lifetime values.
3) Capital expense. Sometimes a business model requires huge warehouses (amazon) or massive R&D, or some other huge capital expense that serves as a meaningful investment.
4) Acquisitions. Sometimes it's spent buying other companies to help achieve goals that they might not otherwise be able to achieve in the required timeline, using only internal resources.
5) Miscellaneous. Accountants, lawyers, bankers, travel, telecom, that great domain name, hosting, internal infrastructure, SaaS products, conference attendance, catering, and other miscellanea.