Related tangent: VCs are trending in the same direction. Even YC increasingly wants to “see more” all the time before funding. That’s what they tell founders who are rejected in the interview phase. Come back with users, revenue — proof of a market. The more traction, the higher the chances you’ll get in next time. Simultaneously, the more traction you have, the less incentive to give YC 7%.
It seems they’re trading one type of risk for another: the risk that promising founders with little traction will fail vs. the risk that promising founders with traction will not apply again.
It doesn’t seem at all clear which type of risk is “riskier”.
Edit: An additional, obvious type of risk: Promising founders who are running out of personal runway will get a job and not apply again.
I think the larger and larger costs means they they don't want to take on unnecessary risks.
The expectation of return is higher than ever, thus, as VC managing other people's money, they have no choice but to comply. Fund what already has an a market and traction.
So, like you said, VC are digging their own grave, but I reckon they know it and can't do a damned thing about it.
Related tangent: VCs are trending in the same direction. Even YC increasingly wants to “see more” all the time before funding. That’s what they tell founders who are rejected in the interview phase. Come back with users, revenue — proof of a market. The more traction, the higher the chances you’ll get in next time. Simultaneously, the more traction you have, the less incentive to give YC 7%.
It seems they’re trading one type of risk for another: the risk that promising founders with little traction will fail vs. the risk that promising founders with traction will not apply again.
It doesn’t seem at all clear which type of risk is “riskier”.
Edit: An additional, obvious type of risk: Promising founders who are running out of personal runway will get a job and not apply again.