Is VC the new PMF strategy?
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Well, obtaining VC funding is a validating of valid workable business model worth serious attention. This is nothing new - most ideas go unfunded and some are lost forever. Some great ideas were lost because they were not funded, most likely. Think of VC funding as a final validation tool.
It was always a strategy. More so with B2B. Would you use a payment gateway or database that has only received seed funding?
I worked at a B2B unicorn once that raised funds, not so much because they needed the money, but because it symbolized to the market that they were here to stay. That they're not going to run out of money and enshittifies when the market downturns.
I worked at a B2B unicorn once that raised funds, not so much because they needed the money, but because it symbolized to the market that they were here to stay. That they're not going to run out of money and enshittifies when the market downturns.
No, I have the opposite reaction. A new company with funding to me just implies a runway that will run out, and no profitable business attached to it. Show me a balance sheet that is self-sustaining on their own revenue, and I'll work with them over VC-funded startups any day.
How possible is it these days to build a software business that is 'self-sustaining on their own revenue' without some decent funding up front?
Are you joking? The cost of writing code is practically free. Some basic hosting is very cheap. Find just a couple of paying customers and you are self-sustaining. Hire only when the revenue supports it, and you remain that way.
The receiving of VS funds now seems the only way one can create any virality in the marketplace. People still have a plea to the expert-from-out-of-town in that they feel... "well VCs are very experienced people who know what to look for when investing", which is counter-intuitive when faced with the realisation that VCs fund 19 losers for every 1 unicorn.
People want a company to be big before it has a marketplace-chance of being big. An press release of "ABC Co., a startup tech firm, has a $25M investment from Vulture VC Fund resulting in a $1B valuation" carries considerably more viral weight that a PR stating "ABC Co., a startup tech firm, has a business plan that can change the world".
And the VC industry is certainly promoting this line of thought... that the starting point of any future unicorn and VC funding go hand-in-hand. With the converse implications that if you have a great concept and execution path, that VC funds are a requirement.