You know, I totally agree with you. Having lived through the bubble 1.0 as a partner of a big new media company this all seems so familiar.
It's quite strange that VCs haven't learned their lessons.
Rogel
· 3 years ago
I'm not an expert in the practices of VC but it seems that if they have success with few companies the ROI cover the failure investments.
It is also important to note that in this round the investment needed is comparitivly low.
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mikkom
· 3 years ago
This is no different than bubble 1.0 - the seed investment is always cheaper. What is really pain in the ass for both investors and founders are the next rounds if the profit doesn't begin to flow.
What happens then is that investors want bigger share of the company for even lower price and at this point owners are usually in some way committed to continuing at the company (VCs know how to do this, fortunately where I love, laws are always in favor of the small guy, not the big company). Next the VCs (who by the way always think they are correct) try to take control of the whole company and everything goes to hell. Believe me, I have lived through that and it wasn't a cheap lesson for me. That's why profit is so important, especially if you have VC money. peace, _mikkom
All Comments
It's quite strange that VCs haven't learned their lessons.
I'm not an expert in the practices of VC but it seems that if they have success with few companies the ROI cover the failure investments.
It is also important to note that in this round the investment needed is comparitivly low.
<div>
</div>
What is really pain in the ass for both investors and founders are the next rounds if the profit doesn't begin to flow.
What happens then is that investors want bigger share of the company for even lower price and at this point owners are usually in some way committed to continuing at the company (VCs know how to do this, fortunately where I love, laws are always in favor of the small guy, not the big company).
Next the VCs (who by the way always think they are correct) try to take control of the whole company and everything goes to hell.
Believe me, I have lived through that and it wasn't a cheap lesson for me.
That's why profit is so important, especially if you have VC money.
peace, _mikkom