Giving up the ghost early

There is four times as much seed capital in the venture market this year as there was 1 year ago. Because of this, it’s easier to attract seed funding than it has been in the past.

I’ve noticed a disturbing new trend and I think it’s related. Startups are “quitting” when the first year doesn’t go as planned. The founders shut the business down, and either take a job or go out and start a new company with more of that plentiful seed funding. In some cases, they just exit with an acquihire and get themselves a nice compensation package without any material return of capital to their investors.

Startups are hard. Rarely does the first year or two go exactly as planned. The hockey stick doesn’t emerge quite like you thought it would. It takes persistence and determination in almost every case, if you hope to be successful.

The thing I worry about is that the Facebook movie and tons of seed funding have made it almost too attractive to get into entrepreneurship. Founders can live for a year or two on seed capital, have some fun, and punch their lottery ticket. If things don’t take off immediately, they can simply move on to something else.

I’m not saying this is the norm or even typical. Most founders are well intentioned and in it for the long haul, of course. This is just another of the myriad problems in figuring out what’s real given the oversupply of seed capital in the market today.

If you’re thinking of starting a business, think about it as a minimum of 5 years and likely 10+ years. That’s what it’s going to take to be successful. And that’s the commitment you should make before taking money from outside investors.

 

Social Share Toolbar

Separated at Birth: Techstars and Startup Weekend

Today we announced that Techstars has acquired UP Global, which includes Startup Weekend and many other fantastic events and programs. Startup Weekend is my absolute favorite global event for entrepreneurship. If you’ve never been to one, you’re … [Continue reading]

Overhead

Yesterday, I didn't leave my house. I was supposed to be in San Francisco for a board meeting but I was forced to cancel the trip suddenly. It left me with a rare day with only that one meeting (which I had to attend remotely) on my calendar. … [Continue reading]

A better professional network

Techstars is an amazing network of over 3,000 entrepreneurs, mentors and investors. Being part of the network is a lifelong benefit for the companies we fund. One of the most important (but often undervalued) assets a startup needs to create is a … [Continue reading]

150M new reasons to be thankful at Techstars

Today, we launched our third venture fund at Techstars, now called Techstars Ventures. It's $150M of fresh capital focused on Seed and Series A and we're now managing $265M in total. You can read the basics of the announcement on the Techstars blog. … [Continue reading]

How to Choose an Accelerator

(This is second in a series of 10 blog posts from my interview with Scott Gerber for the Inc.com Founders Forum. We discussed a bunch of topics including choosing an accelerator, mentoring, acquisitions and the tech talent shortage. You can watch all … [Continue reading]