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More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost

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More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost

The New York Times,

5 min read
5 take-aways
Audio & text

What's inside?

A small but growing cohort of entrepreneurs is ditching venture capital financing. 


Editorial Rating

8

Recommendation

For years, start-ups of all stripes have been eager to fork over a chunk of equity for a hefty round of superstar venture capital (VC) financing. But today, according to financial journalist Erin Griffith, entrepreneurs are beginning to scrap that dream. They are rejecting offers of millions of dollars in VC funding dangled before them. Instead, founders are turning to new, alternative investment arrangements that give them more control. This intriguing look at a new generation of tycoons will interest financiers and entrepreneurs across all industries.

Summary

The odds of success are long for rapidly growing new businesses. Thus, in a “winner-take-all model,” venture capital (VC) investors typically put money into a large number of start-ups in the hopes that huge profits from a few successes will make up for numerous failures. VC firms dominate the financing of fledging entrepreneurs. VC investments grew to $99.5 billion in 2018, the most since 2000. Companies in VC portfolios include the usual suspects in the technology industry and a growing range of firms developing digital applications for businesses such as farming, health...

About the Author

Erin Griffith is a New York Times journalist reporting on technology and venture capital.


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