The first mistake startups make is they need VC or angel funding to get moving. The mindset in SV is bad enough, it does not need to bleed to the rest of the country.
Club Penguin. It was a Web 2.0/virtual community play. Acquired by Disney for $350+ mil. I don't know if Plentyoffish qualifies as a Web 2.0 startup, but it is making a lot of cash. I could name a few more.
Cheers.
PS. I agree with the original poster "The first mistake startups make is they need VC or angel funding to get moving," if by "get moving" s/he means get started. You might need it when you want to expand, grow, get serious, etc. but you don't necessarily need it at the beginning.
Sure, there are a handful. But the fact that those few are famous on account of having taken no investment is evidence of just how rare it is.
Among successful startups, the ratio of those that took outside money to those that didn't is 100 to 1, maybe 1000 to 1. Where the threshold for success is going public, it's effectively infinite.
Someone at BarCampBlock yesterday suggested that in the past >15 years, vc-backed startups of all types accounted for 23% of successful exits, while focusing on tech-specific startups raises that number to 46%. It sounds possible, but a source wasn't provided - it'd be interesting to determine how successful these 'successful exits' were, and if the size ($) of the exit is correlated to the presence of VC. I imagine it would be.
I started 9 companies with no outside cash. The first one i started I sold and then joined the parent company which had not taken in any outside cash. We grew that to $600m in revenues within 5 years.
All that said, I would still say that if you were a BETTING man, your bets would likely go on funded companies.
Money tends to find success. Not the other way around. Money is put into companies that are already on there way to be "successful" (assuming they are not already). The money just expedites the growth.
