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The answer is not black and white, but here are some of my thoughts:

  • It is very difficult to beat VC-funded companies competing with you, even if you have a better mouse trap. They don't care if they lose on most startups, as long as they wing big on a few. To the contrary, with no money, you can not afford to lose. In that regard, competition from VC-funded companies, is unfair.
  • If you have the right idea, why not get VC funding? It is easier than most people think; VC's are just as desperate to find great entrepreneurs, as you are when looking for funding for your startup. 
  • Even with little money, if you have business acumen and have a good product and a great sales team, you can beat VC-funded companies as they tend to hire great product or science people, more so than people who can run a business.
  • Brain power and money are exchangeable, if you have one but not the other, you are at an even level with your competitors who have the opposite mix. Better to have both of them.
  • Some of the billionaire CEO's who were initially VC-funded, eventually can spend their money recklessly to put you out of business. There are ways to fight back, especially if you are a business hacker, but these guys put a brake on innovation by making it even harder, to compete with them.
  • You can choose a business model that requires no investment and run it and scale it with no funding other than re-investing parts of your profits. But that's hurting innovation, as many business models (for instance designing new rockets) need heavy funding.

What are your thoughts on this, especially in the context of data science, where companies can be jump-started with very little money? For instance, I think it would be easy to make a better platform than Facebook, a better search engine than Google. You won't get any funding for this, but do you think it is still feasible today? I think so.

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