Sarah Drinkwater
@sarahdrinkwater
Sarah Drinkwater
@sarahdrinkwater
perspectives on funding and venture capital (VC) and venture capital
As the amount of capital raised by venture capital firms nearly 8x’d between 2013 and 2022, the number of new startups funded didn’t even double.
When you take total VC dollars raised, divided by the number of new companies, you’ll see the average startup today has 5x more VC capital available than its counterpart did in 2013.
Rather than fund more ideas or more types of founders, most VCs simply ended up giving more dollars to more of the same founders and ideas they’d always back.
Great businesses aren’t good enough to drive the kinds of returns needed to generate the kinds of returns mega funds demand. As more capital was consumed, more risk was layered on to push from a great outcome to a mega-fund returning outcome.
Today, the fuel for startups and the oxygen for funds are being cut significantly. There is less available capital and appetite for burn



“We tend to view open source companies at the earliest stages like social networks. Building community momentum is of the utmost importance to the success of an open source project, and that often takes precedence over revenue in the short term.
If you can show a strong community AND strong revenue growth then you will be in an incredible financing position, but often revenue is not necessary if you have the other criteria in this doc accounted for.
If your open source momentum (Bucket B) is weak then you can make up for it by having strong revenue, but there are few examples of successful open source companies that fit this example, as most tend to prioritize community building in the early stages”