A Precursor Ventures discussion arguing the venture-backed startup ecosystem is polarizing: firms will either raise small amounts (≈$10M or less) and aim for self-sustaining growth, or raise very large sums — with fewer companies in the middle. The speaker questions whether middling raises can still yield attractive outcomes and notes examples (e.g., Buffer) of capital-efficient but healthy companies.
I mean, historically the answer has been if you're a venture capitalist, you should try to screen out those companies that you think are going to get on this path and you should avoid them. Yeah. And when I read a lot of the things about seed strapping that people are writing, I don't know how much of that is aspirational versus it's actually actionable. There are more people I've talked to and I've come around this. We're going to have two kinds of venture backed companies. We're going to have companies that raise $10 million or less and figure out how to get on their own self sustaining, ideally high growth path. And then we're going to have companies that raise as much money as humanly possible. And I don't think we're have that much in between. And the question for the companies in the middle is going to be can you still get attractive outcomes if you raise a little bit of money? I think about companies like Buffer and others that have been fairly judicious in the amount of money they've raised and are still even in our own portfolio, healthy. There are companies, I think there is not an inherent tension between being capital efficient and growing and.
