‘It is like a church lit but without a congregation to distract you, with every light and line focused on the high altar. And on the altar, very reverently placed, intensely there, is a dead kitten, an egg-shell, a bit of string…’ –H.G. Wells
Financial losses for today’s start-ups are much more common than they were decades ago, and the losses are much bigger. VCs are making back less from their initial investments than at any point since the global financial crisis of 2007–9. […]
About 85 percent of America’s unicorn start-ups (those valued at more than $1 billion before doing IPOs) that have gone public were unprofitable in 2023, despite most having been founded more than fifteen years earlier. […]
As of early 2024, twenty-three American unicorns had more than $3 billion in cumulative losses, the amount Amazon had the year it became profitable. Five of them (Uber, WeWork, Rivian, Teledoc Health, and Lyft) had more than $10 billion, with Uber well over $30 billion. Other members of this club offer crypto, AI, consumer products, business software, biotech, electric vehicles, and healthcare. Despite these companies having significantly higher losses than Amazon, Amazon’s eventual success continues to be used as an excuse, as if all start-ups can do what it has done. […]
Venture capital funds earn fixed fees from investors that enable them to profit even if start-ups do not. These fixed fees encourage VCs to hire people who are good at raising money and spinning narratives, but not at identifying good opportunities. VCs also convinced not only investors but also cities, states, and countries that start-ups are key to economic growth.
