I'm not sure how founders are being screwed here. They are asking for (in most cases) millions of dollars to develop a likely unproven idea. Also, VC's are not in the business of coddling founders. They are making an investment that they hope will return a profit and that is what is expected by their investors. Places like YC try to cultivate and encourage the founders, but they only give you ~$10000. If you want a couple million then you have to be willing to play the game.
You are right in the fact that new startups should be looking at new and innovative ways to fund themselves and I hope that people take that point away from reading articles like this.
They're being screwed: after developing a workable idea and putting years of work into it, they come away with practically nothing. If that's "the game" then no wonder founders are turning away from VCs. That's why I'm suggesting VCs change. Stop short-changing the founders. VCs with no founders are not VCs.
It's not much when you a) have to split it 2 or 3 ways, and b) have to watch the VCs take home several times as much, when you did all the work.
My point is that there is a value judgement here. VCs are being overvalued, and founders are being undervalued. This serves to demoralize and demotivate the founders, ultimately hurting the value of the company. It doesn't need to be that way.
They are asking for (in most cases) millions of dollars to develop a likely unproven idea.
They're asking for money that can potentially make the VCs very, very rich. Or at least make a good return on investment. The VCs are choosing to make that investment. They're not just being asked; they're answering in the affirmative, at which point they ought to be working in all parties' best interest.
VC's are not in the business of coddling founders.
I think you're making this guy's point. That is the problem. They should be in that business; they'd be helping themselves.
Judging by the number of up-votes, I wonder how many VCs lurk here. They can't be PG fans, considering what PG has had to say about VCs:
You are right in the fact that new startups should be looking at new and innovative ways to fund themselves and I hope that people take that point away from reading articles like this.