What are VCs for?

I found this interesting blog post on Hacker News: Why I Turned Down My Y Combinator Interview

Firstly, I’m tickled by irony of this being one of the top stories on Hacker News yesterday. It’s a post trying to convince you that your business probably doesn’t need Y Combinator.

Setting that aside, I agree with the main point of the blog post. For instance, this is a great tidbit to always keep in mind when talking about VCs:

The entire system of venture capital is designed to produce a small number of very large companies. Everything, from the advice on selecting startup ideas to the expectation for hyper growth, is tainted by this bias. They rely on the overly optimistic nature of startup founders who think they are the one the special one, they are the 1 in a 100.

VCs aren’t always a good fit for a startup. Some ideas, if they can be profitable from the start, are better off as bootstrapped. This is especially if the founders don’t have an urgent need to hire to produce an MVP.

However, I think a more nuanced view of this issue will give us a better perspective. Here’s what I mean: I don’t believe every single VC is looking for unicorns and extremely large exits. I hypothesize this is more often the case in the enterprise startup space than in the consumer app world.

If the author of this post is coming to the conclusion he’s asserting in this blog post, I am willing to bet that a ton of VCs have had this realization, too. A niche would have opened up long ago for VCs who aren’t reliant on unicorns. Some investors would have filled this niche by now. I can imagine a VC firm that specializes in smaller companies with slow, steady growth.

Not everyone is obsessed with hockey sticks.