(p. 8) . . . for every unicorn, there are countless other start-ups that grew too fast, burned through investors’ money and died — possibly unnecessarily. Start-up business plans are designed for the rosiest possible outcome, and the money intensifies both successes and failures. Social media is littered with tales of companies that withered under the pressure of hypergrowth, were crushed by so-called “toxic V.C.s” or were forced to raise too much venture capital — something known as the “foie gras effect.”
Now a counter movement, led by entrepreneurs who are jaded by the traditional playbook, is rejecting that model. While still a small part of the start-up community, these founders have become more vocal in the last year as they connect venture capitalists’ insatiable appetite for growth to the tech industry’s myriad crises.
. . .
. . . founders have decided the expectations that come with accepting venture capital aren’t worth it. Venture investing is a high-stakes game in which companies are typically either wild successes or near total failures.
“Big problems have occurred when you have founders who have unwillingly or unknowingly signed on for an outcome they didn’t know they were signing on for,” said Josh Kopelman, a venture investor at First Round Capital, an early backer of Uber, Warby Parker and Ring.
. . .
But people like Sandra Oh Lin, the chief executive of KiwiCo, a seller of children’s activity kits, say that more money isn’t necessary. Ms. Oh Lin raised a little over $10 million in venture funding between 2012 and 2014, but she is now rebuffing offers of more just as her company has hit on a product people want — the very moment when investors would love to pour more gas on the fire. KiwiCo is profitable and had nearly $100 million in sales in 2018, a 65 percent increase over the prior year, Ms. Oh Lin said.
“We are aggressive about growth, but we are not a company that chases growth at all costs,” Ms. Oh Lin said. “We want to build a company that lasts.”
. . .
Notion, a collaboration software company based in San Francisco, has just nine employees and close to one million users, many of whom pay $8 a month. The company is handily profitable. Aside from a small seed round in 2013, it has avoided outside funding.
Venture capitalists, desperate to get a piece of the company, have dug up Notion’s office address and sent its founders cookie dough, dog treats and physical letters, company executives said. Every few months, a new investor inevitably shows up unannounced at Notion’s gate.
Notion’s ambitions are big — the company wants to replace Microsoft Office. But its executives don’t believe they need hundreds of millions of dollars in financing to do it, nor do they want the strings that come attached.
“We’re not anti-V.C.,” said Akshay Kothari, the company’s chief operating officer. “We’re just thinking for ourselves, rather than for them or other peers.”
For the full story, see:
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(Note: the online version of the story has the date Jan. 11, 2019, and has the title “More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost.”)