SillyDumpling

Unpopular Opinion: VCs get a lot of crap for no reason

Kya dikat hai bhai, udane do paisa. Tumhare thodi hai.

Good firms genuinely perform well and return money. The ecosystem is not forgiving -- you don't survive very long if you don't create any big wins. It's an extremely high stress job with very little WLB. You do make money but it comes at a cost.

Layoffs are sad but at least those jobs existed in the first place? They wouldn't without VC money. India's VC scene is extremely young and it'll take time before we produce a Google. Entrepreneurs are not always right, they are not always nice either; but they definitely are courageous.

5mo ago

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SquishyBanana

Freelancer5mo

VCs kill many startups with unrealistic targets that the main problem. Not every business is designed to give ultra quick returns VCs want . They ruin well potential startups

SillyBiscuit

Samsung5mo

Well all stakeholders - VCs and startup founders know the VC model before fundraising. They know that expectations from VC money is to grow to 100X exits or die trying. So its their choice actually

SillyDumpling

Stealth5mo

VC is not about building 100 SMEs that generate stable incomes. It's about disrupting markets and producing a few giant companies that make up for all the failed ones.

That being said, there definitely are loan sharks out there who screw founders in various ways. It is my optimistic view that in most cases, you have to be founder friendly to survive in the long run.

ZippyMochi

Stealth5mo

While i do largely agree, VCs still owe it to the ecosystem to be at least somewhat responsible with investing.

Failures like Apna destroy credibility of other Indian founders as well, within and outside the country.

There are always deserving startups searching for money. Not funding them while funding copycats with zero innovation is hardly fair to the ecosystem.

SillyDumpling

Stealth5mo

Agree that they hold fiduciary responsibility that needs to be upheld.

Copycats/innovation bit is subjective and can only be said in hindsight.

ZippyMochi

Stealth5mo

Do you honestly think Koo was innovative in hindsight? It was an obvious failure from the very beginning to a lot of people everywhere

PeppyDonut

Stealth5mo

Exactly bhai. Well written. Governments scam karti hain to karne do na tumhe kya dikkat hai. Adani scam karta hai to karne do tumhe kya tumhare paise se thodi na kar raha hai. Koi communal riots mei maara jata hai to tumhe kya dikkat hai, tum ya tumhare parivaar se thodi na koi mara hai.
Govt. hospitals mei achhi facilities nhi hai to tunhe kya dikkat hai? Tumhe to private mei hi ilaaj karwana hai na!!! Never speak anything bad about the powerful and rich. Kyuki tum gareebo ko koi haq nahi hai, sirf ameer hi gyaan pel sakta hai podcasts par akar gareeb nahi. Tum bas mazdooro ki tarah apni aukaat mei reh kar kaam karte raho.

PerkyBoba

Birdeye5mo

The best answer.

ZoomyDonut

Stealth5mo

While standalone all points are 100% correct, pointless example in this context.

VCs aren’t investing out of my tax money
You and I aren’t electing the VC stakeholders
Adani and other large company scams matter because public is investing capital, it’s important to protect their downside

Not sure what point you’re trying to make here - innovation needs someone to attempt, that attempt needs capital, people underwrite the thesis and team and give capital in forecast of this bet paying off. Sometimes it does, most times it doesn’t because it’s insanely difficult to build large outcomes.

DancingDonut

Stealth5mo

No reason is not right. Let me tell you the right reasons:

They raised the cost lf doing business. They poured money, which led to founders paying extravagant salaries to hire and retain talent (especially tech),which wasn't deserving or sustainable. So, companies which didn't raise money /have money to burn, suffered.
They didn't show financial prudence. While they don't manage my money, most of the money they raise comes from non-profits / Pension funds in the US. They literally took money from teachers / hospitals / poor people and burnt it on unreasonable business models. And what's worse, they didn't ensure corporate governance. So they let fraud fester. This ia same as criticising PNB for PP Jewelers scam. They deserve to be punished.
They enabled / wholehearted supported predatory business models like Byju's / Dream11 / Groww. So many Lower-middle class parents stuck paying EMIs because they were victims of mis-selling. Similarly for D11. 20 Cr people have transacted there once. Similarly Options trading in Groww. Acquire users under pretext of financial freedom and get them hooked on gambling.

TwirlyPotato

Stealth5mo

Semi rant incoming structured in 3 points

"Job creation": I don't buy the argument that these startup jobs wouldn't exist without VCs. If there's potential, talent, and regulations in place money will find a way to fund projects that produce a return.

But this very sentiment is what I don't get about VCs, they're not solely responsible for creating the ecosystem. Even if they are, what ecosystem have they created? An over worked, over stressed and over funded world which is not really innovative.

Forgetting the venfrure in VC: 90% of VCs have forgotten or don't understand the venture part of VC, they just back slightly above average risky business in the hope of getting extraordinary returns. Most VCs hoping on podcasts and talking disruption and innovation have done piss poor to fund something other than what are Western clones of startups in India.
Much noise, little signal: Some VCs are genuinely game changing for the entrepreneur but my view is they understand their role as a middle man money manager and stay out of the limelight and instead focus on the entrepreneur. But they are literally 1 in a 100.

Also what is this we are a young ecosystem Argument mean? It's as mature (been through at least one 15 year cycel) in terms of talent and experience as any other ecosystem. Nobody expects a Google from India, just a decent return that's sustainable for the ecosystem but the fact you need an American firm to buy an unprofitable business in Flipkart to produce most of the returns in the ecosystem is telling not just about VCs but the startup entrepreneurship in India.

Bitter Conclusion: Maybe I'm naive and I'm not founder material or whatever but I think overzealous VCs and misguided entrepreneurs have ruined a generation's health and wellbeing in trying to get outsized returns for wealthy people.