Lately though, it seems that VC firms are harming companies and consumers, not helping them. Take Patreon as an example. They offer individual creators a way to get paid by customers and fans. The creators make something cool, customers pay, and Patreon facilitates the payments and communications. At the moment, I support a Stoic Philosopher and a talented Cartoonist financially through Patreon, and I think it’s a great model.
Patreon may be profitable and well-liked, but because they’ve taken in over 100 million dollars (US) in venture capital, their current profitability isn’t enough to satisfy their investors. So their CEO says they may need a new business model.
Youtuber Dan Olson wrote an interesting thread about the impact of this dynamic. He said, and I agree, that “the investors who demand geometric growth are about to demand Patreon eat itself.”
He’s right! Here we have a business that people like, offering a service we value, and it enables small businesses to grow, benefiting many people. That’s how business should work. But because Patreon took in a shit-ton of VC money, they don’t have the freedom to stay in that business. They have to chase more money, a lot more, just to stay afloat.
I’m less interested in assigning blame to the VCs (after all, Patreon sought out and accepted that money, didn’t they?), and more interested in pointing out that when a company takes in a too much VC funding, it’s bad news.
Granted, I’m not in the business, but the whole VC thing seems crazy to me.
No company can sustain the kind of growth these people are looking for and remain healthy. The entire system seems like a scam designed to grind as much profit as possible out of people with no mind toward the broader effects.