Frankly, all this article did is remind me all the reasons why I hate the startup and particularly VC world.
Reasons I Won’t Fund You
41–50 of 78 posts
Re: Reasons I Won’t Fund You
#42I think when a startup is bootstrapped and gaining traction it's almost always the opposite nowadays,i.e. 22 reasons why I don't need your money. Even for my teeny tiny startup (2008) I had several VCs calling us everyday wanting to invest. I really think if you're in a position where your on the VC's mercy for funding, it means your startup needs more work on the product.
What was/is your startup?
Re: Reasons I Won’t Fund You
#43Why can't an SAAS startup have 100% gross (not net) profit? Because they're paying $17 per year for their domain?
It's my impression that gross profit includes marginal costs, but not overhead. I can't speak for the author, but every SaaS company I have been involved with had marginal costs such as customer support. When you are a tiny company and these tasks are performed by founders you could perhaps roll these costs into overhead and claim 100% gross profit. But as a growing company it would become clear that you need to hire…
But selling you a nail for $1 also has some potential support costs - so is it wrong to say that if I buy a nail for $0.25 and sell it to you for $1.00 that has gross profit of $0.75?
But the average customer's support costs might be more than $0.75 -- so would you say that by buying for $0.25 and selling for $1.00 to you, it's actually a loss leader? (I'm really trying to get you to buy more expensive products from me)?
Overall I would like confirmation if this is really what is meant. It doesn't seem to me that support costs would be taken out of gross profit - that is what I think would be taken out of net profits. . .
But I'm sure accountants have well-defined rules on this so I would like to heir their take.
Re: Reasons I Won’t Fund You
#44Earlier quoted context omitted.
A SaaS allows them to track growth easily. You have n susbcribers who pay x a month. It costs y to bring them in and they use the product for z months. It a matter of then looking at the numbers and knowing how much ghr company will be worth in a given time period. Other types of tech products are not as straightforward. Becomes more of a coin toss. Not that a SaaS is a safe investment.
Right... which comes down to: "it's easy for them to measure and understand". And ultimately investors say they want hardware/science. But they don't really...?
A very prominent investor told me that hardware founders need some sort of celebrity attached to their name to raise money. Yes, there are exceptions, but they are rare. Investors know hardware is hard and the lead times are longer, so they see that as added risk which makes them less likely to invest.
Many investors, as a rule, won't even consider hardware and there are very few that specialize in hardware. It's a bit of a catch-22 with investors that say they want you to be different, because most of them really want you to be like everybody else. The majority are trying to ride the next wave, only a very small number are actually trying to find it independent of "signalling."
Every investor is different, every company is different, but if you're doing something unconventional you're probably going to have a very hard time. And now that Pebble has essentially failed, that's going to make investors a lot more wary about investing in consumer electronics.
Re: Reasons I Won’t Fund You
#45I am not sure if my perception is distorted because of HN but is there a class of investors that do not obsess with unicorns and regularly invest with the target of 10x-100x profit?
Re: Reasons I Won’t Fund You
#46I could write 22 reasons why I don't want your money.
Re: Reasons I Won’t Fund You
#47> Almost everyone has competition. I get worried if you have no respect for your competition, but sometimes, I can get past that. But not understanding your competition? That’s a No.
What does such investor expects to hear in if you are Twitter or similar company entering a blue ocean (creating your own market)?
Re: Reasons I Won’t Fund You
#48I could write 22 reasons why I don't want your money.
Many of them are already written by the man himself.
Re: Reasons I Won’t Fund You
#49> If you don’t take an amazing VP intro I give you. I’m out. Um, MY personnel get to choose who comes into the company that they work at. Thanks. This alone throws huge red flags about this investor. I may have a million good reasons for rejecting your "stable boy". Number 1 is: he's a "stable boy". I have NEVER seen a "stable boy" cause anything but problems. A truly amazing VP is probably already employed somewhere…
I'm sure there's someone out there writing a counter-article named "22 reasons why I wouldn't want your funding, Mr Lemkin"
Re: Reasons I Won’t Fund You
#50> I want to hear that you are > building a unicorn And there we have the problem with the scene today.
I agree to a certain respect, but that's VC. You want to bootstrap a company and make a good living? I'm with you 100% of the way, but VC is not going to be a good fit, I think. If you're not giving them 20:1 ROI, they aren't even breaking even (because most things fail). In reality, they want significantly more. Let's say they put in $1 million for even 20%. They need an exit with a valuation of $100 million to get…
Yeah, I guess I shouldn't post before coffee. Its so depressing coming here in the morning to see, every day, 10 different versions of the same 2 posts fetishizing 'disruption' and 'unicorn worship'.
I think we would all be a little happier with some hubris, and fewer delusions of grandeur.