Ask HN: Do you need venture capital? | Hacker News Reader

Ask HN: Do you need venture capital?

4 pointshmontazeri2 comments

Hi all,

I’m wondering these days. Since a lot of well funded companies I read about in the news seem to struggle since it’s becoming harder to raise at the current market, I wonder how many of those companies really were designed to raise vc in the first place.

Do you really need huge amounts of capital to scale a product that itches a major pain?

I’m thinking companies like Zapier. If I’m not mistaken they only raised a small pre seed or seed and didn’t have any further rounds.

That might be super noob to ask but I just feel like way too many companies are getting funded and could’ve been profitable mid sized companies instead going the vc path.

What y’all thinking?

a product that itches a major pain

I think you mean 'scratches a major itch'.

It comes down to whether you want organic or exponential growth. If you make a high quality product that's hard to reproduce well, organic growth is fine, your long-term prospects will be good because you have a reputation for craft, quality control etc. If you have a relatively simple offering that's easy to copy, then you want exponential growth so you can maximize your market share and become the default brand in that space. Maybe you make very tiny profits from each person that uses it, but if there are a lot of them and 80% of them use your thing, then you will get rich. In the latter case you definitely want venture capital because it's ultimately about quantity over quality (and this will become increasingly obvious over time, but many prefer market dominance to being the best).

It depends on your space. If you are up against a competitor with venture backing, you will be at a disadvantage.

It doesn’t matter how good your product is. If they have $20M to spend on a sales and marketing team you will be drowned out and no one will ever get to see your amazing product.

We can knock VC all day and dumb founders who over capitalized and over spent… but there’s a reason some of the worlds biggest companies are venture backed.

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