TechWag

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In a world of 12,000 dollar startups, is the VC Model that we currently have broken or it just time for a change in when companies will need a huge infusion of cash to keep on growing. There are limits to bootstrapping, and when you have hit those limits, and the company is taking off but needs more money then an Angel or a VC is a good place to ask. But what about companies that are perking along quite nicely, and do not need an infusion of cash, those companies that are growing on a nice steady upwards curve, and can afford everything they need to keep growing?

Techflash and Nathian Kaiser, two awesome people to get to know and both are startups are seriously taking a look at the VC model. Nathan has done well by his web site NPost, and Techflash is also doing fine. Probably the most interesting viewpoint into this is thinking what I would do with my startup and getting VC money. The bottom line is that I don’t need it, and do not necessarily want it either at this point. I also am not looking for angel funds either as I am doing a supportable growth rate. And while I will make bet the bank deals with my company, all of it is managed through a company line of credit that is backed personally. My own startup (still not registered locally at Seattle 2.0 either) has been doing phenomenally well over the last year, and averaging the kind of returns that a VC would love to have, 300 to 400 percent per month depending on what month you look at.

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While we started out phenomenally small, the projections are beyond what we thought we should be doing, but then there is the rub, I don’t want or need VC or Angel investing. There are angels and VC’s that would invest in my business, but I don’t need them. The steady growth is going where it needs to go, and doing better than projections. While the VC’s might be looking for huge payouts, M&A or IPO buy outs, the bottom line is that there are companies out there that will not return what a VC or Angel fund needs to get from their investment. As mentioned, as an asset class, maybe it is time for VC’s to rethink their processes. I would rather personally invest in a business and help that business grow rather than do a pool resource like a VC as well. While the percentage wins are low, the first person to come up with a formula to determine winners in the technology field will also be the first investment group that really starts cleaning up.

Maybe one way to check the viability of a company is to check the buzz around it, and what kind of buzz the company is getting. While Techcrunch, Robert Scoble, Louis Gray and others are the leaders of the pack in helping build buzz for a company, there are few that they truly love. They might have vested interest in companies, and those are worth looking at from a funding viewpoint. This does not need to be a winner in the traditional sense, but where are the technology word of mouth leaders right now. They are in friendfeed, they are in their own projects like the crunch pad or Building 43 or Burn URL. These might be worth looking at, but you also have to ask are they worth investing in at the same time.