In either case, it's almost always a good idea to use other peoples' money instead of your own.
I agree. You used to be able to get bank loans on co-investment (i.e. you put up some of the capital). Now they require personal liability. Things have gone to the worse.
You're undermining your ability to have a few failures to learn from if you put all of your personal assets on the line in one venture.
True. But in a time when (a) bank loans were available with co-investment alone (not you're-insane-if-you-take-it personal liability) and (b) people in the middle class actually had money, it was possible to get going while only putting up 5% of the seed money (and getting a larger equity disbursement, because you actually are doing the work on a low salary).
But arguing that somehow we'd be better of if people were risking massive amounts of their personal capital on their startups (vs what we have now where the risk is split between them and others who can afford it) seems wrong.
I agree. My point is that, before the VC era, people didn't have to risk massive amounts of personal capital. A 5% co-investment, and a willingness to work on a lower-than-market salary for a while, was enough to get you in the game.
Even the founders who do have money aren't so dumb as to turn away VCs out of pride of being a "true entrepreneur" if the terms are favorable.
Fair. It's not that all VC is bad or should be turned away. It's that a 6-month permission-seeking process discourages most people who have the entrepreneurial spirit, favoring social climbers.
I agree. You used to be able to get bank loans on co-investment (i.e. you put up some of the capital). Now they require personal liability. Things have gone to the worse.
You're undermining your ability to have a few failures to learn from if you put all of your personal assets on the line in one venture.
True. But in a time when (a) bank loans were available with co-investment alone (not you're-insane-if-you-take-it personal liability) and (b) people in the middle class actually had money, it was possible to get going while only putting up 5% of the seed money (and getting a larger equity disbursement, because you actually are doing the work on a low salary).
But arguing that somehow we'd be better of if people were risking massive amounts of their personal capital on their startups (vs what we have now where the risk is split between them and others who can afford it) seems wrong.
I agree. My point is that, before the VC era, people didn't have to risk massive amounts of personal capital. A 5% co-investment, and a willingness to work on a lower-than-market salary for a while, was enough to get you in the game.
Even the founders who do have money aren't so dumb as to turn away VCs out of pride of being a "true entrepreneur" if the terms are favorable.
Fair. It's not that all VC is bad or should be turned away. It's that a 6-month permission-seeking process discourages most people who have the entrepreneurial spirit, favoring social climbers.