To add another nuance here - the other issue to consider is the power-law nature of VC returns (meaning a small number of investments disproportionately contribute to returns). Given that dynamic, funds are eager not to miss out on those big winners. The supply of companies that look like they have that potential is less than the available capital can fund, so to those companies, capital looks very abundant. Companies that do not appear to have that potential may not experience the same abundance of capital. The challenge for funds is identifying the signifiers of potential outperformance, and it seems to me that a lot of funds are looking at the same indicators (whether or not they are the right ones) which makes for a feeding frenzy on those companies.
It can, but that implies capital is the only thing required for good execution, and we know that's not true (as we saw with some of the Softbank failures).
However, if you need to make a bet, you make a bet, because for a VC fund, the small chance of an outsized return (that can return your fund) is better than a more likely chance of a 'decent' return, so you often make a bet and double down while it still seems viable.
There's a reason Lyft kept getting funded even when Uber raised significantly more.
Completely agree. Capital is used to make Kings. Companies like Uber, Lyft, WeWork - won't exist without this. As for quality of the founders, I think, with enough money (and loss appetite), a mediocre team can execute well on an decent opportunity.
It is hard for an incredible team to execute well on a decent opportunity, even with ample capital; the 'it is trivial once you have money' trope is just that, a trope. Money does not make a company successful; financing helps along the route, and helps allow the founders to take bigger risks (with hopefully similarly outsized rewards), but it does not execute for the founders. That part is still on the founders, and is still the most important part of any startup bet; 'can they raise future capital' is certainly a factor in the decision, too.
