The Risky Game of VC Funding Creates More Failures That We Don’t Hear About

It was reported by Pitchbook this week that 3,200 funded startups failed this year. This isn’t the end of VC funding; this is how that game works.

  •  Boom times before back to normal.
  •  Big bets before failures.
  •  Overspending before cutbacks.
  •  High hopes before shutdowns.
  •  Growth before profits.

Total tech layoffs at funded and public software companies totaled over 300,000 in the last 18 months. More are on the way.

The VC funding game is exciting on the way up. It’s not fun when reality hits.

That’s the bet that venture investors and funded founders make together. Go Big or Go Home. It probably won’t work, but there’s a chance.

That’s a very different bet than starting a normal small business. And very different from growing a bootstrapped startup or profitable SaaS business.

Practical SaaS founders didn’t bet their companies (and years of their lives) in hopes of making it really, really big with billion-dollar exits.

They didn’t take on “easy” VC funding because that’s what “everyone else” was doing two years ago in the funding boom.

The 100 practical SaaS founders I talked to in the last month aren’t failing or running out of cash. They aren’t desperate for funding or laying off employees.

They are making steady progress and building valuable software companies with customer funding–revenues from happy customers.

It’s always very hard to create a software business, but practical founders don’t face the deep existential stress of “if this doesn’t work fast, we’re dead.”

That makes all the difference, in the long run.

There are many ways to create a valuable software company, but some paths have much better odds than others.


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