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Comment by pclowes | Hacker News Reader

I forget exactly who said it but somebody said something along the lines of “venture capital is rocket fuel, unless you have a rocket it will only blow up your engine. Have a Bugatti Veyron? It will blow up your engine.”

This is also something DHH has been saying for years. However, I think it is more true now than ever. With how easy it is to start and scale a software company I really struggle to understand the justification for venture funding at the earliest stage, unless you want to larp as a founder, have low conviction, or just want “the experience”.

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You probably know answer and just hyperboling here, but there are plenty of reasons to raise as a startup. Even in pure software.

Most obvious one is you’re building something actually technically challenging and need to grow your team to get there. People, especially great people, are bloody expensive. No way to afford any reasonable headcount as a 22yo first time founder without venture money.

Of course, simple ideas are easy and need less resources and might be bootstrapped, hard ideas less so.

Maybe for something truly novel, but the exception proves the rule here IMO.

What is an example of a not simple idea pure software play that would require VC funding at the earliest stage?

VC funding is often required for companies that require a lot of runway prior to selling. The example that comes to mind are database companies like Mongo, dgraph, scylla etc. These require a fair amount of upfront work to create the product before their usable. A different example are industries that require a fair amount of compliance like healthcare, banking etc

You could have customers commit money upfront. You could do it slowly with a reduced headcount. You could raise money, but not from VCs. You could have a solutions/consulting team that brings in the bucks while financing product development.

Agreed. Put another way: because software has low marginal cost and high up-front cost (even higher in very competitive markets) it makes sense to raise venture early to hire a great team and build an awesome product that then scales incredibly well (great investment returns).

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