Startup entrepreneurs look eagerly towards the venture capital community, seeing the myth of a big pot of money ready to be given away to worthy ventures. Advisors, business school professors, and a lot of people who ought to know better, see VC funding as a given for far too many ventures, when in reality, there are a lot of great ideas that never get a single dollar in funding.
It’s true that venture capitalists are still raising big money, having taken in about $13 billion in the first quarter of 2016 alone. But they are a lot less eager to send that money out into the world than ever before, and VCs are more focused on setting aside funds to keep the companies already in their portfolios moving forward. They need more reserves on hand for follow-on funding for their existing companies which haven’t yet turned a profit.
