"But even then, our lack of traction is what set the scene for that dumb decision."
But that's exactly what may be the problem with VCs. Sometimes you'd have to go through a dozen of ideas before you find one works. If you're frugal enough and can keep the company afloat for a few years, you're likely to succeed in the end.
But VCs may push the company to burn all cash in the next 4 months pursuing the idea #2. And if it doesn't work - you're down and out.
Very few businesses have the very first idea paying off handsomely. This may make VC's capital a very high-risk proposition: you either hit the jackpot with your first idea or you end up with nothing.
No, you're mixing up a chicken/egg thing here. It's not the problem with VCs that, if you're frugal, you can make an early round last until you find the right idea. You can't have that early round money without promising a certain kind of return to the VCs. It's your fault (or, mine, in this case) that VC money has been put at risk.
You can't moralize about VC's "pushing the company to burn all cash". It's the VC's money you're talking about The VCs invest with the expectation that you're going to go for broke. That's the model. Most startups fail, even the carefully run ones. The 1-2 successes need to pay back the failures and then some.
They have a finite attention span. This naturally leads to them encouraging companies to try the idea that is only 20% likely to work but takes 18 months over the idea that is 40% likely to work but takes 4 years to work.
But that's exactly what may be the problem with VCs. Sometimes you'd have to go through a dozen of ideas before you find one works. If you're frugal enough and can keep the company afloat for a few years, you're likely to succeed in the end.
But VCs may push the company to burn all cash in the next 4 months pursuing the idea #2. And if it doesn't work - you're down and out.
Very few businesses have the very first idea paying off handsomely. This may make VC's capital a very high-risk proposition: you either hit the jackpot with your first idea or you end up with nothing.