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Most Businesses Should Never Raise Venture Capital

YC's own partners just told you not to raise venture capital. They compared it to trying to make the NBA. For 50 guys, it works. For everyone else, it's a trap.

Key Points

VC is designed for businesses that can return 100x to 1000x. Most businesses can't.
Most rich people did not raise venture capital to get there.
A bootstrapped product making $30-50K per month with 10 hours of work is winning.
VC enables businesses that need millions upfront. If you don't need it, skip it.

I had a friend who made one of these companies. His product generated about $30 to $50,000 a month and took about 7 to 10 hours a month of maintenance. The entire time I was working on my startup, he was living life.

The NBA Problem

Dalton Caldwell and Michael Seibel run YC. They just told founders to stop chasing VC money.

Dalton & Michael: The vast majority of businesses should not raise venture capital. It's just not the right path for most people.

"Getting into the NBA is really hard. Not the best path to have a good career is to be like, 'Oh, I'll just make the NBA.' For 50 guys, I'll just be one of those guys. And then game on."

The $50K-a-Month Guy

Michael had a friend who built a software product. It made $30,000 to $50,000 per month. It took 7 to 10 hours of maintenance. Per month.

While Michael was grinding at his startup, his friend traveled the world. Got married. Had kids. Lived life. No investors. No board meetings. No pitch decks.

"I would watch his life on Facebook and be like, this is amazing. He traveled the world, he got married, he had kids. He won."

When VC Actually Makes Sense

Some businesses need millions of dollars upfront. Google could not have been bootstrapped. The servers alone made that impossible. No loans could have covered it.

If you need millions in capital before you can generate revenue, venture capital makes sense. But most businesses can start generating revenue much sooner.

"If you don't need it, don't take it. If you need millions of dollars or $10 million to get your company to break even, there aren't other mechanisms in our economy to give that to you."

The Decision You Can Revisit

You can change your business model, your pricing, your market — but you can't change the fundamental structure of a venture-backed company.

VC does not cannibalize anything. It enables businesses that would not exist otherwise. Think of it as incremental entrepreneurship. Not a requirement.

"It's also a decision that you can revisit. If you don't want to start a VC-backed company now, but your bootstrap product starts doing well and you want to do it in the future, great. You can."