Startups got less investment funding in 2016

[S2007S]

I rather doubt it, during new year's Shark Tank marathon they had a Stanford MBA who had raised $ from the valley VCs for her lingerie line to be sold online without even a business plan and when she came on the Shark Tank for round 2 they laughed her out of the tank IE there is too much money sloshing around the valley. The valley has two problems 1) VCs are fighting to be the first in on an idea 2) they are just throwing money hoping it sticks and perhaps now they are realizing they have created a low return environment and are pulling back a bit.

http://sharktankblog.com/business/naja/

Was that the one who thought he company was valued at $10 million asking for $500,000 for 5%?

There is too much money sloshing around in every corner of this entire market, how do you think Snapchat came to light and is now going IPO with a $25 billion dollar value...how is that even possible? It seems in the shark tank they are quick to let many know how ludicrous they value their companies mean while there are unicorns worth hundreds of millions and even billions and no one is even taking a step back to question why? People seem to be throwing money at everything and anything.

 

[Sig]

Was that the one who thought he company was valued at $10 million asking for $500,000 for 5%?

There is too much money sloshing around in every corner of this entire market, how do you think Snapchat came to light and is now going IPO with a $25 billion dollar value...how is that even possible? It seems in the shark tank they are quick to let many know how ludicrous they value their companies mean while there are unicorns worth hundreds of millions and even billions and no one is even taking a step back to question why? People seem to be throwing money at everything and anything.

Did you even read my post? The company in question is worth $10M+ today, it went forward with an angel round and is a success, despite how sure you and your wise shark tank experts were that it was "ludicrous".
Google was just as crazy when it was both funded and went IPO. I mean what the heck did two a-holes (and they really were kind of a-holes) from Stanford think they were doing competing in a crowded search engine marketplace with big dominant players, like Yahoo. You all were saying or would be saying the same thing at the time about them. And Amazon. And any number of other now successful companies.
You're displaying a combination of not understanding how the startup market works and basing your initial thoughts about the market on an old edition of shark tank. The startup finance world is designed to have lots of failures, a middle tier of moderate successes, and a few $500B companies. A few or even several of the unicorns are going to fail, no question about it. And a few are going to eventually be $500B companies. And over the past 40 years there have been plenty of people who have successfully played the math on that. Who are the guys who made their millions shorting all those "ludicrous" unicorns again?

 

[Van_der_Voort_4]

Sorry but you really couldn't be more wrong here. First, the Shark Tank you saw on Naja was a rerun from the beginning of 2015. Naja is doing very well now two years later(www.naja.com), employing dozens in the U.S. and Columbia, making the founder and her team money, and doing some good in the world. So your basic premise that you somehow need a "qualification" to be an entrepreneur was proven incorrect in your specific example. More generally, it's funny as an entrepreneur to hear these armchair warriors talk down about "qualifications" and "too much money" as if they are moral imperatives. I was a military pilot when I started a successful fintech company 10 years ago, who the hell did I think I was and where were my "qualifications"? Dealmaker definitely wouldn't approve! I probably wouldn't have been hired in an entry level position by the companies I later edged out, run by a bunch of dealmaker clones. There are literally thousands of successful startups with founders who wouldn't meet a dealmaker "qualification" test in the industry or niche they successfully disrupted, that's basically what an entrepreneur is! BTW, what is your industry, sounds like it's ripe for disruption?
I'd also ask if you've ever pitched to a VC? Because we went through a stage where I pitched a number of times, with a three year old company making money and dominating our niche. Still didn't get funding (fortunately, as my more experienced self looks back). If there was some secret Stanford MBA handshake that gets you unlimited VC money with any random idea I must have been sleeping when they passed it out. Would be interested to hear your experiences in this area?
Literally thousands of solid companies get funded every year, most aren't unicorns or names you see on TV. You and I probably wouldn't "get" the majority of them, and yet thousands of them succeed and a few succeed spectacularly. The VC industry continues to attract funding based on their returns, and the top tier funds (which ironically are the ones investing in the unicorns) continue to produce outsized returns. To make some moral judgement about "too much money sloshing around the valley" based on watching (what you didn't know where) reruns on (what you didn't know) went on to be a successful company on shark tank is perhaps not the best way to form opinions about parts of the world you aren't familiar with?

Thanks for sharing and congratulations on your determination.Very informative post.

 

[jj90]

There is too much money sloshing around in every corner of this entire market, how do you think Snapchat came to light and is now going IPO with a $25 billion dollar value...how is that even possible?

Eh......You could have said that about facebook or instagram.

 

[dealmaker]

Sorry but you really couldn't be more wrong here. First, the Shark Tank you saw on Naja was a rerun from the beginning of 2015. Naja is doing very well now two years later(www.naja.com), employing dozens in the U.S. and Columbia, making the founder and her team money, and doing some good in the world. So your basic premise that you somehow need a "qualification" to be an entrepreneur was proven incorrect in your specific example. More generally, it's funny as an entrepreneur to hear these armchair warriors talk down about "qualifications" and "too much money" as if they are moral imperatives. I was a military pilot when I started a successful fintech company 10 years ago, who the hell did I think I was and where were my "qualifications"? Dealmaker definitely wouldn't approve! I probably wouldn't have been hired in an entry level position by the companies I later edged out, run by a bunch of dealmaker clones. There are literally thousands of successful startups with founders who wouldn't meet a dealmaker "qualification" test in the industry or niche they successfully disrupted, that's basically what an entrepreneur is! BTW, what is your industry, sounds like it's ripe for disruption?
I'd also ask if you've ever pitched to a VC? Because we went through a stage where I pitched a number of times, with a three year old company making money and dominating our niche. Still didn't get funding (fortunately, as my more experienced self looks back). If there was some secret Stanford MBA handshake that gets you unlimited VC money with any random idea I must have been sleeping when they passed it out. Would be interested to hear your experiences in this area?
Literally thousands of solid companies get funded every year, most aren't unicorns or names you see on TV. You and I probably wouldn't "get" the majority of them, and yet thousands of them succeed and a few succeed spectacularly. The VC industry continues to attract funding based on their returns, and the top tier funds (which ironically are the ones investing in the unicorns) continue to produce outsized returns. To make some moral judgement about "too much money sloshing around the valley" based on watching (what you didn't know where) reruns on (what you didn't know) went on to be a successful company on shark tank is perhaps not the best way to form opinions about parts of the world you aren't familiar with?

You missed my point completely! My point was VC in question did not even ask for a business plan IE barriers to entry are very low. My guess is you don't live in the Bay area thus are not privy to the daily chatter.
To me Naja deal sounded like Theranos deal where VCs piled in without due diligence.....

https://www.elitetrader.com/et/thre...ock-in-private-companies.305030/#post-4372746

http://sharktankblog.com/business/naja/

 

[dealmaker]

Was that the one who thought he company was valued at $10 million asking for $500,000 for 5%?

There is too much money sloshing around in every corner of this entire market, how do you think Snapchat came to light and is now going IPO with a $25 billion dollar value...how is that even possible? It seems in the shark tank they are quick to let many know how ludicrous they value their companies mean while there are unicorns worth hundreds of millions and even billions and no one is even taking a step back to question why? People seem to be throwing money at everything and anything.

Yes, I believe it was...

 

[Sig]

You completely missed my point! My point was not whether Naja is/ was going to be successful company or not, rather the VC in question did not even ask for a business plan which means VC never bothered to find out how the company is going to operate, when will it be profitable, what are the overheads and I could go on and on. My guess is you don't live in the Bay area thus are not privy to the daily chatter.

So first of all Naja didn't received a funding round from a venture capital firm before the March 2015 shark tank episode, if you know anything about startup funding you'd know how silly it would be to go to angel investors after you already had a VC round.
Second, $145,000 in revenue in 5 months is worth a thousand business plans, again how many business plans have you written and how many successful startups have you founded? I've written business plans for a class and to pitch to VCs. The VCs almost certainly didn't read them and as well they didn't because they were almost entirely worthless conjecture, as all startup business plans are. VCs vet you and your team, listen to your idea, determine if your idea has traction and want to know that your addressable market is big enough that you can potentially have a $100M+ exit. That's worth far more than any business plan. Your misconception that Catalina could just waltz into the nearest VC office an ephemeral idea and a Stanford MBA and get funded is exactly that, a misconception and a pretty gross one at that. Again, this is something you'd know if you spent any time starting companies or investing in startups. Can you articulate what your experience has been in either areas that would have you coming up with such a radically different view of the space from me and pretty much every other entrepreneur I know?
Third, you pretty clearly said "Basically her qualification was being a Stanford MBA IE well connected in the valley....". Clearly you were wrong in this particular case based on her continued success, and clearly your definition that you have to have some kind of "qualification" to start a company is pretty much the antithesis of the entire concept of disruptive entrepreneurship. Again, what is your industry?
I've pretty clearly iterated my experience in this area, is yours seriously confined to watching a nearly two year old episode shark tank marathon to diagnose that there's too much money sloshing around the valley? Oh, and living in the Bay area listening to chatter? Listen, I've founded two successful startups, one based in the Bay area, pitched to VCs up and down Sandhill Road, have a number of friends who are both VCs and fellow entrepreneurs in the Bay area....in fact according to you I can get VC money simply by dropping a copy of my diploma by a VC office, and yet I'm "not privy to the daily chatter" like you are? OK, sure.
This is an interesting subject, I discuss it often with smart well meaning people who know a lot about it, we disagree and we learn. It appears that you're not one of those people on this particular subject, although I'm sure you are in the area of your qualification (what was that again?), so I'd recommend you stop pontificating on it.

 

[Jamie J.]

Less interesting and not attractive start-ups magnetize so few investors.

 

[dealmaker]

So first of all Naja didn't received a funding round from a venture capital firm before the March 2015 shark tank episode, if you know anything about startup funding you'd know how silly it would be to go to angel investors after you already had a VC round.
Second, $145,000 in revenue in 5 months is worth a thousand business plans, again how many business plans have you written and how many successful startups have you founded? I've written business plans for a class and to pitch to VCs. The VCs almost certainly didn't read them and as well they didn't because they were almost entirely worthless conjecture, as all startup business plans are. VCs vet you and your team, listen to your idea, determine if your idea has traction and want to know that your addressable market is big enough that you can potentially have a $100M+ exit. That's worth far more than any business plan. Your misconception that Catalina could just waltz into the nearest VC office an ephemeral idea and a Stanford MBA and get funded is exactly that, a misconception and a pretty gross one at that. Again, this is something you'd know if you spent any time starting companies or investing in startups. Can you articulate what your experience has been in either areas that would have you coming up with such a radically different view of the space from me and pretty much every other entrepreneur I know?
Third, you pretty clearly said "Basically her qualification was being a Stanford MBA IE well connected in the valley....". Clearly you were wrong in this particular case based on her continued success, and clearly your definition that you have to have some kind of "qualification" to start a company is pretty much the antithesis of the entire concept of disruptive entrepreneurship. Again, what is your industry?
I've pretty clearly iterated my experience in this area, is yours seriously confined to watching a nearly two year old episode shark tank marathon to diagnose that there's too much money sloshing around the valley? Oh, and living in the Bay area listening to chatter? Listen, I've founded two successful startups, one based in the Bay area, pitched to VCs up and down Sandhill Road, have a number of friends who are both VCs and fellow entrepreneurs in the Bay area....in fact according to you I can get VC money simply by dropping a copy of my diploma by a VC office, and yet I'm "not privy to the daily chatter" like you are? OK, sure.
This is an interesting subject, I discuss it often with smart well meaning people who know a lot about it, we disagree and we learn. It appears that you're not one of those people on this particular subject, although I'm sure you are in the area of your qualification (what was that again?), so I'd recommend you stop pontificating on it.

So first of all Naja didn't received a funding round from a venture capital firm before the March 2015 shark tank episode, if you know anything about startup funding you'd know how silly it would be to go to angel investors after you already had a VC round.
Second, $145,000 in revenue in 5 months is worth a thousand business plans, again how many business plans have you written and how many successful startups have you founded? I've written business plans for a class and to pitch to VCs. The VCs almost certainly didn't read them and as well they didn't because they were almost entirely worthless conjecture, as all startup business plans are. VCs vet you and your team, listen to your idea, determine if your idea has traction and want to know that your addressable market is big enough that you can potentially have a $100M+ exit. That's worth far more than any business plan. Your misconception that Catalina could just waltz into the nearest VC office an ephemeral idea and a Stanford MBA and get funded is exactly that, a misconception and a pretty gross one at that. Again, this is something you'd know if you spent any time starting companies or investing in startups. Can you articulate what your experience has been in either areas that would have you coming up with such a radically different view of the space from me and pretty much every other entrepreneur I know?
Third, you pretty clearly said "Basically her qualification was being a Stanford MBA IE well connected in the valley....". Clearly you were wrong in this particular case based on her continued success, and clearly your definition that you have to have some kind of "qualification" to start a company is pretty much the antithesis of the entire concept of disruptive entrepreneurship. Again, what is your industry?
I've pretty clearly iterated my experience in this area, is yours seriously confined to watching a nearly two year old episode shark tank marathon to diagnose that there's too much money sloshing around the valley? Oh, and living in the Bay area listening to chatter? Listen, I've founded two successful startups, one based in the Bay area, pitched to VCs up and down Sandhill Road, have a number of friends who are both VCs and fellow entrepreneurs in the Bay area....in fact according to you I can get VC money simply by dropping a copy of my diploma by a VC office, and yet I'm "not privy to the daily chatter" like you are? OK, sure.
This is an interesting subject, I discuss it often with smart well meaning people who know a lot about it, we disagree and we learn. It appears that you're not one of those people on this particular subject, although I'm sure you are in the area of your qualification (what was that again?), so I'd recommend you stop pontificating on it.

Business plan shows among other things shows whether investee has a clear vision for their company, when you say business plans are all conjecture no need to read them to me shows that you are operating from a fixed mindset, you are like a trader who won't take a loss therefore we will have to agree to disagree...
Obviously Theranos was vetted thoroughly.....

 

[Sig]

When you say "The VCs almost certainly didn't read them and as well they didn't because they were almost entirely worthless conjecture" I realize that we will have to agree to disagree.

Again, based on what experience?

Its interesting how we form an initial opinion on something based on just a few minutes exposure to something like a TV show that we all know is clearly not going to tell the full story. And yet because its the first opinion we ran into, we stubbornly hold on to that original incorrect opinion in the face of someone who actually knows the full story behind that actual thing you saw on TV, who has significant experience in the area, and who clearly deliniates a list of inaccuracies in that opinion. The smart thing to do is say "fair enough, I guess I have something to learn in this area", and yet the best most of us can get out is this "we'll have to agree to disagree" BS, akin to saying "mistakes were make (but not by me!)".
I am still curious as to your experience in venture capital and starting companies? And really interested in your industry, I live for finding industries populated with this "qualifications" bias? Certainly you can agree to agree on disclosing that?