The Future of Startup Funding
Using that heuristic, I'll predict a couple more things. One is that investors will increasingly be unable to wait for startups to have "traction" before they put in significant money.To an outsider, this sounds like a small-scale version of the events that caused the Dot-com bubble: Investors race to fund ever-shorter rounds of companies that might someday be valuable, but have nothing right now but a sales pitch and a website. This arrangement would benefit a company like YCombinator, who seem to successfully fund companies based on little more than gut feel. But taking away "success as a predictor of success" from the VCs' playbook, would they have another strategy that beats random guessing? The Dot-com bubble suggests "no." Hopefully the small average investment really does turn the math on its head!