
The End Of Venture Capital As We Know It?  - nickb
http://www.techcrunch.com/2008/12/06/the-end-of-venture-capital-as-we-know-it/
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byteCoder
Key point: "[Low capital requirement/pure software] [s]tartups can be run so
cheaply now (with open-source software, cloud computing, and virtual teams
spread across the Web) that many more can achieve profitability without any VC
cash."

I truly believe that this is the silver lining for software developers willing
to take the leap into the new economy in this cloudy economic situation.

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jhancock
Its only the end of VC if you think that VCs only invest in Internet start-
ups. Its great that its become vastly cheaper to create a new Internet
product.

There are many other industries that can make use of VC; green tech, for
example. VC isn't dying, its just going to focus on different industry
segments.

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time_management
VC is working its way to irrelevance, due to the "no man's land" around
$150-500k of initial funding. This is, uncomfortably, the order of magnitude
which can give a serious start to a promising idea: 2-4 peoples' salaries,
plus operating expenses, for 12-18 months.

Investors seem to either want to put up small amounts (~$20k) that equate to
mere weeks of living expenses, or make multimillion dollar investments,
forcing a company both to give up an unreasonable share of its equity and to
grow more rapidly than most tech companies are ready for (just try adding 6
new programmers to a 2-person project). By having a blind spot inconveniently
placed right at the amount that most startups need, investors are pricing
themselves out of relevance.

Given this undesirable arrangement, the reason startups exist at all is that
most tech people usually have some savings after being employees for a few
years, and during good economies, it's so ridiculously easy for a talented
programmer to get a decently well-paying job that no one's worried about
risking some savings by working for equity and deferred pay-- e.g. quite
possibly for free-- on a cool idea. If the economy continues to sour and the
ease of finding a good job is no longer the case, startups will have a much
tougher time finding people to work pre-funding, and if investors aren't
willing to meet startups on their needs, there will be fewer of them.

One major trend (and a positive one, in my mind) that I'm going to call in the
startup world is that many, many more startups in the 2010s will be starting
in smart, low-COL locations such as Minneapolis, Madison, and Portland.

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noor420
Related Article ->

"As IPOs hit 30-year low, VCs hit tough times"

[http://www.sfgate.com/cgi-
bin/article.cgi?f=/c/a/2008/09/30/...](http://www.sfgate.com/cgi-
bin/article.cgi?f=/c/a/2008/09/30/BU101387M9.DTL)

