Hot answers tagged venture-capital
21
I never used to think it would cost that much either ... but then I started to grow the company.
Each salary has to be paid for 2 years, then have 30% on costs per person on average.
So you have
3 good developers - $80-100K each. Say $300,000 per year.
1 marketing person = $150K
2 sales - $100K each = $200K
2 support people answer questions and fixing ...
16
Outside of a brief moment of happiness from writing what may be a satisfyingly nasty/angry/sarcastic reply, nothing positive will come of it.
If he is a professional, he will do none of the options you list above, but you on the other hand will have succeeded in burning a bridge or possibly making an enemy.
Bottom-line, if you didn't care about what he ...
15
Bootstrap if:
This is your first business
You don't know what you're doing
You'll probably just pee lots of money up the wall
You want to keep control
You have no plans to float or sell
Consider VC if:
Having the money will make a big difference
If the factor stopping your growth really is cash, and not experience or something else
You know what you're ...
11
There are a wide range of options available for you when starting out:
Bootstrap. Have a day job that pays your bills, have the night job which is your start up. Get some clients, use the money from them to reinvest in more marketing and advertising, keep going until you don't need the day job.
Going through job boards and online job sites like odesk and ...
10
A rough bulleted summary of each:
A typical Angel:
Investing their own money
Smaller amounts of money $25K, $50K, maybe as high as $500K
Early stage / seed stage
Usually business person or retired business person, successful in their own right
Want to get a return, but it is more like a hobby
Want to help you build a successful business and help and ride ...
10
Hey Ron. I'm sorry about getting laid off, that couldn't have been fun. If you want a quick bolt of inspiration read Steve Jobs take on getting fired:
http://news-service.stanford.edu/news/2005/june15/jobs-061505
You should stop analyzing this situation and give yourself a short deadline and build something. Whatever it is your dreaming about, there is ...
9
VCs tend to invest other people's money (and more of it at any one time), but angels invest their own. Also, they have different motivations and different profiles. Angels aren't just in it for the money - they tend to want to be part of something successful, feel the thrill of being back in the game and have bragging rights with their mates (my investment ...
9
A previous Answers.OnStartups question asked about the best startup pitches people had seen. Worth taking a look through.
Some other resources for startup pitches are:
http://pitches.techcrunch.com/
http://www.virgin.com/entrepreneur/pitchtv/
http://vator.tv/
And conferences like DEMO and TechCrunch 40 / 50 usually have pitches that are a lot more ...
8
The VC method for evaluating companies involves figuring out what the company is going to be worth at the point of IPO, and working back what the company should be worth now, at a very high discount rate.
Let's say that your company could be compared to a few existing public companies in a few years. If you expect to have 20 million customers, and existing ...
7
if you don't know what it means ... then it means:
"take the money - you are getting a good deal" ; )
it also means .... the VC thinks your company is worth $3M right now "pre money" and is proposing to invest $3M so your company would be worth $6M ("post money") and the VC owns 50% **. this is the simplest explanation.
(footnote)
** it does not mean ...
7
It's true that often they look for multiple founders, because you'll need multiple people and it's nice to see the team is already there, rather than having to fill a key function (like CTO).
But don't let that stop you. Just make it clear that you know the holes in your knowledge and that you expect them to plug them with people they like.
VCs and angels ...
7
Paul Graham said he looks for companies with at least two founders, because it proves that the idea was good enough to convince at least one person. That reasoning make sense to me: if you haven't been able to convince one person that your idea is going to work, your chances are significantly dimmer.
7
As Jason and others indicated in their answers, it is not illegal for the business to fail and unless there was some kind of fraud involved, you should not be worrying about your investors suing you or any implications of jail time, etc.
For the business itself, there are actually a few possible paths forward and exactly what happens depends on how the ...
7
Money? You're asking for money based on an idea? The people who put money into that are traditionally the three F's: Friends, Family, Fools.
Bootstrap is the route to go, and not the semi-bootstrap route you suggest, but closer to your third option. Build the product on nothing but what you can put into it, and try to avoid spending much on it if possible. ...
7
When I hear startups say things like this, should I take points away from them?
No, but you should start thinking. Thinking about the startup's product, market and people. And start asking further questions to get more information.
The information you're looking for as a possible new employee isn't in the "hiring fast" part. It's in the:
methods the ...
7
I don't think VCs should care about the technology stack you are using too much. Sure, I've heard some of them saying "we think our startups should be using RoR/Python, not Java", but I honestly don't take them too seriously. There are examples of startups using .NET, and Stack Exchange/Stack Overflow is one of them.
I'd say: at the stage when you are ready ...
7
If your business progress is going well enough right now I would continue working long hours (2 jobs) until the income from the start-up makes it possible for you to leave work. It doesn't have to 100% replace your fulltime pay initially, but enough for you to survive on and be confident you can work on your startup until it really breaks through.
Keep ...
7
People will tell you that you need a co-founder because that's what everybody says; but I disagree.
It's not ALWAYS necessary to have a co-founder to launch a startup and there are plenty examples of single-founder startups that went big to prove it. If you can work on your own, just keep going like that until the product is live. Besides, you could also ...
6
I'm a big believer in transparency myself and we're pretty transparent at HubSpot.
Having said that, one piece of advice would be to me mindful of the fact that there are two parties impacted when you share certain information about your discussions -- your company, and the VCs.
So, I'd suggest that sharing details on a particular VC's analysis or outlook ...
6
I think the reason single-founder-startups rarely get funded is that if the problem you're trying to tackle is "small" enough for you to be able to solve it reasonably well on your own, you're probably not VC-material.
VCs care about BIG problems that can make them MILLIONS of dollars. If your idea is BIG like that you'll likely not be able to even get to ...
6
A great resource that might help:
Seth Godin has covered this question in his manifesto titled The BootStrapper's Bible.
He even priced it accordingly for the bootstrapper, free. You can download it here:
http://changethis.com/manifesto/show/8.BootstrappersBible
Its probable a bad idea to bootstrap if you have easy access to a lot of capital, need a large ...
6
Investment due diligence is pretty standard across VCs. There will be a checklist that they will provide that incorporates all the materials you will need to give them. In broad terms, the types of things they ask for are:
Financial Position: All the standard stuff like P&L, etc
Management/Critical Staff Resumes: Anyone who is critical to the operation ...
6
This sort of founder/management liquidity (also known informally as "taking money off the table") is becoming increasingly common.
For a while, VCs tended to frown upon this (because they wanted to keep the team "hungry").
But, the current thinking is that in later rounds, letting the team sell some of their stock is a good thing for the business. The ...
6
When I hear startups say things like
this, should I take points away from
them?
Generally yes, although it depends. Personally I try to hire a new person after I'm happy with the last hire and his/her relationship with the team.
If you are hiring 2-3+ programmers at a time in the middle of a project, there is a big chance that you are doing it ...
6
Alex is absolutely correct in his answer to you. But he didn't cover one other possibility.
Let's suppose you have come up with a way to burn water instead of gas in cars. You have a friend who knows the President of a major car company and he introduces you to him. You tell the President your idea and later he writes you a letter and you don't like his ...
6
Venture Capitalists invest in the business -- the money typically goes to the business for use in running the business. Sometimes (but VERY rarely), the company distributes some of that cash out to its shareholders.
When a company is bought out, like Instagram was, then the people who used to own the target company typically either get cash or stock of ...
5
Single founder companies do get funded. All the time. I've angel-invested in a few myself.
Having said that, I'd still advise finding one or two co-founders. Even if you are exceptional at various things (sales, product, marketing, finance, etc.), startups can become a lonely business and it's nice to have someone you like, trust and respect to work ...
5
"The market price [of an idea] is less than the inconvenience of signing an NDA." - Paul Graham
Paul Graham also has an article somewhere which basically says that instead of keeping your ideas secret, you should be telling everybody, because it's easy to miss something or fool yourself into believing some flawed idea is great. By telling others they will ...
5
With all SaaS companies, no investor nor customer will give you the time of day without some sort of demo, beta or whatever that is functional. Screen shots and mock-up just don't cut it since the barrier to building SaaS applications nowadays is really low. So, you have to build something to show people, regardless of the path you take.
You do need to ...
5
Here is what I would do:
Figure out which international VCs have backed businesses that originated in Oz in the last 3 years.
Use LinkedIn to network to the entrepreneurs who started those businesses.
Ask them to connect you with their VC if they think your business could fit their investment approach.
Your best bet will be to approach VCs who have had ...
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