Maybe I'm unaware of something but there seems to be a weird obsession in the start-up community with 'getting funded' over creating great products and connecting with users from the ground up regardless of funding.
You can see it as validation, I guess. Your idea is probably a good one if people are willing to invest. And for some ideas, you need upfront investment.
I would always try to bootstrap though. You are closer to the customer and I think it leads to a more stable company overall.
Plus many of us got into this to get away from having a boss. I can't imagine anything worse than having a large investor breathing down my neck. The only boss I'm willing to work for is the customer. If that stifles growth so be it. The freedom of maintaining full control and ownership of what I've built is priceless (until an exit :P)
I agree in principle, but in execution there are a lot of non-technical founders who know they can move a lot faster by getting funded and having an expert build a product for them. Happens a lot in SaaS. That being said, what @m5blum
said about validation is spot-on. Funding doesn't imply validation necessarily, but it does imply that the founder's idea isn't totally out there
Raising funding is just the startup founders way of getting back to comfort. That's it. Some companies need funding, but not the exorbitant amounts raised these days.
Starting a company shouldn't be comfortable. You should be scared. You should be spending every waking moment thinking about how you can survive and beat your competitors. That's what builds great products.
Raising $500 million and having a $50 million revenue run rate is not impressive at all. I don't care who you are.
Temporarily for high burn, loss making startups. The good ones, the early stage ones with clear focus on profitability and sound unit economics will continue raising.
Also human resource costs will be sane and affordable with the "high burn" startups not polluting the hiring ecosystem. Market demand for digital remains and startups will continue survive them.
New leaner startups will be born. And many will keep going.
I welcome this downturn. It’s been so hard for us to hire in this ultra competitive market. I feel like us bootstrapers have been getting crushed by this venture capital flowing like crazy.
Marketing has also been crazy expensive, because it’s a competitive market. With all the cash flying around like crazy, the marketing channels have been so expensive lately.
So bring on the downturn, and let us compete on product! And not just getting out spent by the 1000s of stupid startups that have been granted millions for no reason.
Funding ultimately serves the purpose of speed. In highly competitive landscapes or first-place-takes-all areas of innovation speed is ultimately what makes or breaks a company.
But you're right that not all businesses need speed to succeed. Many bootstrapped businesses have triumphed without any funding (Basecamp/37signals immediately comes to mind).
I think the mistake many startups in the past decade have made is thinking that funding is a way to "live the startup dream" and focused on growth for the sake of growth. This has led to the situation many find themselves in, with layoffs and "hard times" ahead simply because they prioritized speed for the sake of speed.
Funding is important to grow companies to a global scale which is the goal of a lot of entrepreneurs, especially in silicon valley. Uber is a good example.
I'd say it has never been a better time to be a startup.
As long as you manage your costs (don't burn through it looking for product-market fit for example) and have an effective marketing strategy then you'll be golden. Less competition, bigger barriers to entry for new competitors etc. etc.
I guess the big recession is over... Even with all this stress in the market my community for indie makers keeps growing. So maybe there is hope for the bootstrappers out there! :D
Sequoia is known for issuing these stark warnings, but they aren't necessarily correct. Check out their 2008 report, RIP Good Times. The economic situations are far different than one another today, and I don't think now is any worse of a time to start a company than it was a few years ago.
When the economy is good, people rarely care about saving money by switching to a new solution. But now it's a convincingly sell, so there are certainly still opportunities out there (unless you're in the luxury market, then you might want to reconsider).
I don't think it's really tru because money is literally everywhere but what i can say and where i could agree with that idea is that start up are born everywhere sometimes for no real purpose. You must have a real product. service that will solve a real problem, there i think you'll be funded "easily". People now are more focused on being funded than putting their focus on the most important, THE PRODUCT. Let me know you thoughts :)
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I think business who based on speed to grow will ended up bad for both founder & employee sometimes. It's business that focus on valuation instead of intrinsic value. Maybe some young people are glad they are entering startup company, but what they don't know that they are entering a hot air balloon.
Once the fuel is ran out, u forced to get out because its getting dangerous. Or if it goes up too fast, it will pop out & crashed down so bad. Always remember that when company got funded, cashflow goes in financing activities, it's not make any profit or grow real assets.
Basically, I think that people should really focus on some different ways of getting and producing ideas as, the old school typical thoughts such as - "let's change the world" or "I saw a need for this in the lives of people", are really mediocre now...
we should focus more on actual improvements like robotics, A.I, neuroscience, and health, or at least on developing something out of curiosity as
sometimes, it is not - 'need is the mother of invention' BUT 'invention can be a result of valuating the needs'.
as most the startups focus on making easy and quick cash, but sometimes all we need is a slow steady, and long-term visionary startup..... not some social media app.
I think creating a startup is more possible than ever before, funding may have gone down but the methods and techniques gathered by communities like this makes it more possible to get an idea, validate it, and make it into a living breathing revenue machine than ever before. Might just be delusional though, need a bit of delusion to be a founder.
They quoted Matt Turck, I have been following him since a while and I love his insights on the VC world. Here is his last blog post on the same subject, The Great VC Pullback of 2022: https://mattturck.com/vcpullback/
In the article it mentions that Cameo is laying off 1/4th of their employees and in my opinion, Cameo has been one of the more interesting companies launched in the last year and a half. Tons of celebrities have restarted their career thanks to it. The problem with their business, though, is that it's reliant on individual consumers. I'm not surprised that people don't want to spend their last $50 on an island boys cameo when gas is $8 a gallon.
But look at the data on layoffs.fyi/ --> 700+ have announced layoffs in the last 6 months. Perhaps there is an opportunity to look through this data and see where it's possible to compete with the ones that aren't moving as quick right now.
Then again, this downturn might last a few years..
The title should read "The good times are over for VC-funded startups".
I came to say this exactly.
Maybe I'm unaware of something but there seems to be a weird obsession in the start-up community with 'getting funded' over creating great products and connecting with users from the ground up regardless of funding.
What do you think?
You can see it as validation, I guess. Your idea is probably a good one if people are willing to invest. And for some ideas, you need upfront investment.
I would always try to bootstrap though. You are closer to the customer and I think it leads to a more stable company overall.
Plus many of us got into this to get away from having a boss. I can't imagine anything worse than having a large investor breathing down my neck. The only boss I'm willing to work for is the customer. If that stifles growth so be it. The freedom of maintaining full control and ownership of what I've built is priceless (until an exit :P)
Great point. In my mind validation of the customers paying you is much better than investors.
At some point the idea is either useful for a person or not. Regardless of what investors think.
I agree in principle, but in execution there are a lot of non-technical founders who know they can move a lot faster by getting funded and having an expert build a product for them. Happens a lot in SaaS. That being said, what @m5blum
said about validation is spot-on. Funding doesn't imply validation necessarily, but it does imply that the founder's idea isn't totally out there
I agree that speed (up to a point) is the best argument against bootstrapping.
Raising funding is just the startup founders way of getting back to comfort. That's it. Some companies need funding, but not the exorbitant amounts raised these days.
Starting a company shouldn't be comfortable. You should be scared. You should be spending every waking moment thinking about how you can survive and beat your competitors. That's what builds great products.
Raising $500 million and having a $50 million revenue run rate is not impressive at all. I don't care who you are.
I completely agree. Interesting way to seek comfort imo.
The obsession with funding and startup valuations were becoming obscene imo.
I wish that was true but the VC-driven economy is not finished yet, but it will change the paradigm a little
Temporarily for high burn, loss making startups. The good ones, the early stage ones with clear focus on profitability and sound unit economics will continue raising.
Also human resource costs will be sane and affordable with the "high burn" startups not polluting the hiring ecosystem. Market demand for digital remains and startups will continue survive them.
New leaner startups will be born. And many will keep going.
This comment was deleted a year ago.
I welcome this downturn. It’s been so hard for us to hire in this ultra competitive market. I feel like us bootstrapers have been getting crushed by this venture capital flowing like crazy.
Marketing has also been crazy expensive, because it’s a competitive market. With all the cash flying around like crazy, the marketing channels have been so expensive lately.
So bring on the downturn, and let us compete on product! And not just getting out spent by the 1000s of stupid startups that have been granted millions for no reason.
I think the start-up community has a weird obsession with 'getting funded'.
What about making something small and useful for a target audience regardless of funding?
It's almost like founders are looking for the 'VC Approval' and the 'funded lifestyle' over the actual value creation.
Idk maybe I'm wrong.
Funding ultimately serves the purpose of speed. In highly competitive landscapes or first-place-takes-all areas of innovation speed is ultimately what makes or breaks a company.
But you're right that not all businesses need speed to succeed. Many bootstrapped businesses have triumphed without any funding (Basecamp/37signals immediately comes to mind).
I think the mistake many startups in the past decade have made is thinking that funding is a way to "live the startup dream" and focused on growth for the sake of growth. This has led to the situation many find themselves in, with layoffs and "hard times" ahead simply because they prioritized speed for the sake of speed.
100% agree with you.
Speed is the biggest advantage.
Many startups mistakenly see funding as 'living the startup dream' instead of creating real value.
Funding is important to grow companies to a global scale which is the goal of a lot of entrepreneurs, especially in silicon valley. Uber is a good example.
It really depends on your ambitions.
100%
This comment was deleted a year ago.
This paints a clear picture of why founders seek funding - to a point.
Some of the obscene valuations and funding has just been way over the top.
We're seeing a huge push back against this now as a 'tech' bubble pops and many companies proceed to lay off tons of their work force.
Almost as if they weren't essential to core growth in the first place and they were just spending to spend. Idk I could be wrong.
I'd say it has never been a better time to be a startup.
As long as you manage your costs (don't burn through it looking for product-market fit for example) and have an effective marketing strategy then you'll be golden. Less competition, bigger barriers to entry for new competitors etc. etc.
I guess the big recession is over... Even with all this stress in the market my community for indie makers keeps growing. So maybe there is hope for the bootstrappers out there! :D
Sequoia is known for issuing these stark warnings, but they aren't necessarily correct. Check out their 2008 report, RIP Good Times. The economic situations are far different than one another today, and I don't think now is any worse of a time to start a company than it was a few years ago.
When the economy is good, people rarely care about saving money by switching to a new solution. But now it's a convincingly sell, so there are certainly still opportunities out there (unless you're in the luxury market, then you might want to reconsider).
I don't think it's really tru because money is literally everywhere but what i can say and where i could agree with that idea is that start up are born everywhere sometimes for no real purpose. You must have a real product. service that will solve a real problem, there i think you'll be funded "easily". People now are more focused on being funded than putting their focus on the most important, THE PRODUCT. Let me know you thoughts :)
Premier Funds Recovery are currently collecting funds back for all victims who fall into scams and scams Hurry up and contact him explain your situation to them then will help you and your funds in affordable fees all crypto scam recovery funds, bitcoin scam recovery , investment scam, mobile spy, hacking contact them on ([email protected]) chat him on WhatsApp +1 (336) 280-4842 I just want to share the good news with people who need help to contact him immediately chat Them
I think business who based on speed to grow will ended up bad for both founder & employee sometimes. It's business that focus on valuation instead of intrinsic value. Maybe some young people are glad they are entering startup company, but what they don't know that they are entering a hot air balloon.
Once the fuel is ran out, u forced to get out because its getting dangerous. Or if it goes up too fast, it will pop out & crashed down so bad. Always remember that when company got funded, cashflow goes in financing activities, it's not make any profit or grow real assets.
Cool!
Basically, I think that people should really focus on some different ways of getting and producing ideas as, the old school typical thoughts such as - "let's change the world" or "I saw a need for this in the lives of people", are really mediocre now...
we should focus more on actual improvements like robotics, A.I, neuroscience, and health, or at least on developing something out of curiosity as
sometimes, it is not - 'need is the mother of invention' BUT 'invention can be a result of valuating the needs'.
as most the startups focus on making easy and quick cash, but sometimes all we need is a slow steady, and long-term visionary startup..... not some social media app.
sorry to offend anyone or for my bad grammar.
Not necessarily.
We've been working on utopiops.com, which helps you mange your AWS account without spending hours and hours or hiring a DevOps engineer.
This is actually an opportunity for us to help teams that were ignorant about using their cloud/human resources efficiently.
I think creating a startup is more possible than ever before, funding may have gone down but the methods and techniques gathered by communities like this makes it more possible to get an idea, validate it, and make it into a living breathing revenue machine than ever before. Might just be delusional though, need a bit of delusion to be a founder.
They quoted Matt Turck, I have been following him since a while and I love his insights on the VC world. Here is his last blog post on the same subject, The Great VC Pullback of 2022: https://mattturck.com/vcpullback/
Too harsh for me. I just started.
In the article it mentions that Cameo is laying off 1/4th of their employees and in my opinion, Cameo has been one of the more interesting companies launched in the last year and a half. Tons of celebrities have restarted their career thanks to it. The problem with their business, though, is that it's reliant on individual consumers. I'm not surprised that people don't want to spend their last $50 on an island boys cameo when gas is $8 a gallon.
But look at the data on layoffs.fyi/ --> 700+ have announced layoffs in the last 6 months. Perhaps there is an opportunity to look through this data and see where it's possible to compete with the ones that aren't moving as quick right now.
Then again, this downturn might last a few years..
This comment was deleted 2 years ago.