Do you need venture capital?
Nobody opens a restaurant to raise venture capital.
So why did software decide that raising money is the win? A funding round is not a business result. It is a bet, made with someone else’s money, on one narrow kind of outcome.
Most companies are quietly enrolling in a game they were never suited to play, one that only pays off if they become enormous. For almost everyone, that is the wrong game.
Here is the math you take on the day you take the money, and what it does even to a company that is winning.
The math you inherit
Venture capital is a bet on one enormous winner. Most companies are not it.
A fund raises money, invests in perhaps 25 companies, and has about ten years to return it. The whole model rests on the power law: one giant winner has to carry the rest. As one European founder programme tells applicants outright, no giant means no meaningful return. So the fund does not need you to build a good business. It needs you to bet the company on becoming a giant one.
It is easy to miss how this works even on a company that is winning. Picture one that raised a €2.5M seed round and hit €3M ARR in nineteen months, profitable and growing fast.
Maya R.
Founder & CEO · 3h
We just crossed €3M ARR 🎉 Nineteen months in. Profitable, a team of 15, growing every quarter. Proud of this crew. 🙌
The post every founder dreams of. Here is the business behind it, and why the investors on the cap table will not be celebrating.
Operating costs
Nineteen months to €3M ARR is genuinely fast. It still sits deep inside the zone a fund treats as failure.
The pressure is to abandon the first line for the third. Most who try land on the second, wound down or quietly sold off. That is how a profitable, growing company ends up on the list below.
This is how companies that could have simply been good get pushed past what the business can hold. Europe is full of the headstones, and the most expensive of them are the most recent:
Sweden’s battery champion. Raised more than $15B from the likes of Goldman Sachs, Volkswagen and Microsoft, then fell from a $12B valuation to bankruptcy in 2025.
UK battery gigafactory and national flagship. Into administration in January 2023, about four years after it was founded, before its plant was ever built.
UK electric-van maker. Valued at $13B after its 2021 listing, in administration by early 2024.
German air-taxi maker. Filed for insolvency in December 2024; its entire workforce was stood down in early 2025.
German air-taxi maker. Insolvent in October 2024, and again in early 2025 when a rescue deal fell through.
UK used-car marketplace. A Nasdaq listing near $8B in 2021, in administration by May 2024.
UK furniture retailer. Listed at £775M in June 2021, in administration 18 months later; a rival bought the brand for £3.4M.
UK digital health. Peaked around a $4B valuation in 2021, bankrupt by 2023.
UK energy supplier. Collapsed in November 2021 and had to be taken into a government-run administration before being sold on.
The capital did not save them. It accelerated them into a wall. Most of these were funded, not foolish, and every one of them had customers whose data was still on the books when the lights went out.
When venture capital is the right call
None of this means venture capital is always wrong. It is the right tool for a specific kind of company: one attacking a genuinely winner-take-all market, or one that needs serious capital up front before it can earn a cent, like deep tech, hardware or biotech, where being first to scale is the moat. If that is the business you are building, and you want that ride, the power-law bet is the one to make. For most software companies, it simply is not.
The cost you don’t see
There is a second bill, and your customers pay it.
Everything above is what venture capital does to the company. But when a funded company misses the trajectory and is wound down or sold in a hurry, its most valuable remaining asset is the data its customers trusted it with. That is the reason we built Wysor without investors.