Markus Frind: "Do VC Backed Founders Actually Make Any Money?"

He has a point, though he's wrong in a lot of details. It's true that one of the best ways to make a lot of money out of a startup is not to raise too much.<p>What he doesn't seem to get is that some startups actually cost a lot to start. Loopt, for example, could not have been built without VC scale money. If you want to do something like that (or Google), you need millions. And if you succeed, you end up rich. Ending up with 10% of the company is not so bad if the company is worth a billion dollars.<p>Also, his statistics are junk. That "government report" showing that most small businesses are still in operation after 4 years has nothing to do with startups. The small businesses they're talking about are plumbers and shoe shops. The success rate is lower for startups. Which makes sense, because the payoff, if the company succeeds, is much higher.

If funding reduces your share to X of it's current value, then it should increase the value of your company to, at least, 1/x of it's current valuation. <p>For example, if funding reduces your 100% ownership to 25% (x = 0.25), then you'll have to multiply the value of your company by 4 (1/.25) to end up with the same valuation. If you think funding will push you beyond the 4x, then it's a good deal.

Supposedly Kevin Rose has much more than 10% of Digg, same with Mark Zuckerberg/Facebook. Didn't the Google guys maintain a lot of equity as well? I think some people use VC as a crutch and other's use it as a tool. The ones that do the latter seem to do pretty well.

"What would you rather own, 100% of something or 5% of a dream?"<p>This goes directly against what I've heard before: "a small piece of a big pie is better than a large piece of nothing."

The % that you get is only a small point of taking on money. It's all the control and day-to-day mechanics that you are really giving up.