Comment by rvz
1 day ago
> While I love companies that become profitable early and grow at a rate that allows them to continue being profitable ... it becomes an issue with investors.
You know what? Good, and hopefully Linear sets the example instead of the others just running back to VCs again for another top-up.
Once you have shown that you're profitable, then you don't need them. The moment you do, you're always having to cede control and be at their mercy after raising and burning ridiculous amounts of their money and losing parts of your business.
Of course VCs see that as an issue as they feed on startups by doing this. If you're profitable then you don't need them.
Otherwise, you'll be on your Series Z until there are no more investors left to throw money on to your unprofitable startup.
I agree with what you're saying ... but why take venture capital then?
They should have raised debt instead.
"Venture debt is like a delicious sandwich that only costs ten cents, but occasionally explodes in your face" - PG
Part of being a startup is still that there is not a lot of historical precedent and uncertainty how well your business will do in the future. The problem with any fundraise is that it's always future looking (perhaps maybe you create some kind of option structure to call on it if needed).
VCs, especially Tier 1, can be still helpful in different ways, and them owning equity aligns the incentives more than debt.