Why the angel/VC hype is bunk for most hackers

Sites like Techcrunch and to a lesser extent PG's Hacker News make it seem like it is easier than ever to get funded (ex-f&f) if you have a cool idea. Don't believe it. Even if your startup has a good team with an idea that you think others will want, getting funding, even minimal seed funding, is tough.

The reason is the math. There is a limited amount of capital out there for seed stage funding and only a handful of investors willing to risk funding at the angel/seed stage. For every Etsy, Groupon, or Foursquare there are thousands of hopeful entrepreneurs (even hackers) who will never get a dime of outside money.

Since YCombinator came onto the scene a few years ago, I'm sure that its rejection rate is now an order of magnitude harder than getting accepted to Harvard (a 1-100 chance instead of a 1-10 chance). Moreover, there are many entrepreneurs who don't even know what YCombinator is, so for them it is an even more arduous task because at least Paul Graham & friends are willing to take a flier on novices. Most investors aren't and will never be.

So, don't get your hopes up that even if you do have a bright idea and a working concept that it will mean investors will come knocking to fund you.