For folks that are working on a product right now, given the incentive structures behind venture capital, are there genuine reasons to pursue that kind of money? Let me rephrase: How many folks out there are searching for for some kind of niche business with enough to cover expenses and had some profit in a small scale?
I had a short experience with the music industry and the whole enterprise + VC sounds the same dynamic between artists and record labels back in the day, where was not enough to play in local bars and have a steady presence there, but everyone wanna to be Metallica or Anthrax.
I've never heard of a musical group or artist who can make a sustainable living on just a local scene (although maybe that's rather the point, since they stayed local to wherever they are). Even for huge artists, from what I've heard merch is where the money is, not ticket or record sales (or today, streaming, which is _ludicrously_ tilted against the artist actually making any money). Admittedly I last looked into this around twenty years ago and my sample is tilted more towards the folk singer-songwriter type rather than, say, DJs.
That's not to diss local artists, though. Some are incredibly talented, and I loved the scene I was in it. Just, if we're talking about investing, making music looked like 9 times out of 10 a money sink you do for the love of it, not an investment opportunity.
> Even for huge artists, from what I've heard merch is where the money is, not ticket or record sales
That’s not quite true. It’s an extreme example, but Taylor Swift’s personal earnings from her current tour is expected to end up in the billions.
Back in the day, touring was something of a marketing tool to sell records, today the records are marketing for the tours (and they build hype, which yields sponsorships and so on). Merch is an important revenue stream, but a large chunk of that is sold on tour.
That's like saying you should take VC money because you can end up being like Mark Zuckerberg. It's a 1/50'000'000 sort of case or perhaps even less likely.
I wasn’t suggesting anyone do anything, I was mostly trying to point out that large acts can make a lot of money on touring. Most make very little, if any at all.
Agreed but using examples like Taylor Swift in music is far off from focusing purely on (exited) unicorns when talking about VC. You have to look outside the 99th percentile to find generalized insights.
Plenty of musical groups make a living locally and not only pop music. If you play a classic instrument you get opportunities for festivals, parades, weddings, local shows. Joining a marching band can pay for your schooling for example.
Many classic rock bands with members in their 40/50/60s perform live, have a local following and make good money without selling CDs.
Cover bands are often local and make good coin without album sales.
Then you have musicians performing children who get paid.
You are never going to be a pop star or a VC rocketship company but few are. But you can make a solid living just performing locally.
Any business that needs up front capital needs to get it somehow. E.g. develop a medical device that has years of development, testing, and regulatory lead time. Who pays the salaries and for the laboratories and studies?
It's either: only allow companies that are already big to do new things, which they often aren't geared for in various ways, or have a mechanism to allow capital into new businesses from outside, that comes with certain expectations. You're free to decline both the capital and the expectations, of course, because this is a free agreement made between two parties.
If you have a business that can get off the ground without funding, great. That just isn't reality for most.
There is maybe some people who raise money "because it is cool", but I would think it is in the minority. If you have a business that is profitable, you are happy with the growth, etc, there is little sense in going to the investors begging for money. The couple bootstrapped businesses I have seen didn't have much interest in raisin.
I had a short experience with the music industry and the whole enterprise + VC sounds the same dynamic between artists and record labels back in the day, where was not enough to play in local bars and have a steady presence there, but everyone wanna to be Metallica or Anthrax.