To VC or Not to VC Panel Report

September 26th, 2006

I attended a forum at San Francisco’s Commonwealth Club the other night entitled “To VC or Not to VC”. The panel consisted of a great mix of entrepreneurs and venture capitalists who shared their thoughts on the state of the venture industry.
Discussion was lively on several topics, including the relative merits of early entry to the marketplace (made possible by a venture-backed team) vs. bootstrapping to a prototype and seeking market feedback on the product before getting financed. The latter strategy could be paraphrased as “version 1.0 probably won’t hit the mark dead on, so save yourself a bigger piece of the company by waiting for market feedback before you take venture money”.

Doubtless both strategies have merit and each probably works well in certain situations. Dave Samuel from Brondell, Inc. tried to cover the third alternative, which is to bootstrap all the way. Since his business is selling electronic toilet seats he has not received (or sought) much interest from VCs.

Remembering that Microsoft, Sun and other major technology companies built their businesses with very little venture funding, I would have been intrigued to hear someone from a more traditional (successful) technology company talk about how bootstrapping worked, or didn’t, for him or her.

Specifically, I wonder whether the big companies are useful measuring sticks in 2006: with so much more venture capital available than in the 1970s and 1980s, is it possible for a technology company to make it without hefty chunks of outside capital?

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