This content was created by Lorenzo. This content was uploaded by Lorenzo. This is a YouTube video titled "Dalton & Michael: The vast majority of businesses should not raise venture capital" created on February 16, 2024. It features a discussion between Dalton and Michael about the challenges and considerations of raising venture capital, emphasizing that it is not suitable for most businesses and exploring alternative paths to success.
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The vast majority of businesses should not raise venture capital. And I'll extend that point. Venture capital is not interested in investing in the vast majority of businesses.
Venture capital as a product is specifically for investing in something where their investment could be worth at least 100 times more, if not a thousand times more.
Yes.
And so trying to put that jet fuel into something that isn't going to grow to be big, everyone is going to be sad and lose.
Starting a VC backed company really hard. Not the best way to get rich. I always like to equate it to like athletics. It's like getting into the NBA is really hard. Not like the best path to have a good career is to be like, oh, I'll just make the NBA.
Yeah, that's simple. Right.
450 guys. I'll just be one of those guys and then game on.
Right.
So this is not the only way to get rich. Let's take a further step. Most people who are rich did not raise venture capital dollars. I think the other thing that's funny is like there is no one trying to force you or cajole you into starting a VC backed company. If you don't want to do it, don't do it. Correct. It's also a decision that you can revisit if you don't want to start a VC backed company now, but your bootstrap product starts doing well and you want to do in the future great, you can. So I think the other thing is that no one is trying to say in our industry that if you make a great software product that allows you to make enough money to live a good life and it's not VC backed that you haven't won. You won.
Yep.
I had a friend who made one of these companies. You might have used his product. His product generated about 30 to $50,000 a month and took about seven to 10 hours a month of maintenance. The entire time I was working on my startup, he was living life. Like I would watch his life on Facebook and be like, this is amazing. He traveled the world, he got married, he had kids. I'm like, he won.
And so maybe people may have this question watching this video. Michael, why should I apply to yc? You guys just did a great job of explaining why not to do it. Why should I do venture?
So I think that there are some, some businesses where you actually need money up front.
Yes.
And if you need money up front and you're building a software business, the venture capital industry can help you get money up front. If you don't need it don't take it. If you need millions of dollars or $10 million to get your company to break even, there aren't other mechanisms in our economy to give that to you. If you go to the let's use.
The example of Google. I don't know just because famous one of the most valuable companies in the world. I don't know how you could have bootstrapped that. And so again maybe the audience is saying I don't want to build Google. Great. No one is saying you have to build Google. Wanted to build Google.
Yeah.
It doesn't seem mathematically possible. There's no route they could have done it.
No bank raising money, no loans they.
Could have gotten to buy the servers and do the things they did.
No, no. And so we should just be thinking about VC as enabling incremental entrepreneurship that wouldn't be around otherwise. Not as cannibalizing anything like it's just enabling that incremental founder.
