Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Consumer startups that said no to investor money

recode.net

Post reply on HN
Print view View original

21–30 of 45 posts

Re: Consumer startups that said no to investor money

#21

Post by cirgue »

lilbobbytables wrote: post #7
acconrad wrote: post #5

I'm not surprised. The default for starting a startup seems to be that you need VC funding because you need to monopolize as fast as possible and having extra cash will allow you to get there sooner than if you were to bootstrap. What we're seeing is that growth is able to happen in spite of the frothy VC environment, not because of it. So if it is possible, then why would you have to seek funding? If you think getti…

Do you believe it's worth taking on investors to bring in people that have both connections and input that will be helpful for growing your product?

If you need those things it may be worth it, but as the poster lays out that benefit doesn't come free. Like everything else it's a trade-off. I would bet that most startups don't actually need those things, or at least can get them sufficiently in ways that aren't as expensive.

Re: Consumer startups that said no to investor money

#22

Post by tchaffee »

eitally wrote: post #16

I think it's stupid to overuse the term "startup" where it doesn't make sense. At what point is something just a new small business? Is there an arbitrary set of lines that differentiate between "startups" and every other new enterprise? The vast majority of new businesses are funded solely by personal savings, friends & family, and SBA loans. Conflating something like a deodorant company with a pure play tech startu…

We could also flip that around. Startups are nothing more than small businesses. Most will fail. A few will go on to become somewhat bigger. One out of a million becomes a Ralph Lauren empire. What's the difference really between a small business and a startup?

Re: Consumer startups that said no to investor money

#23

Post by kerng »

tchaffee wrote: post #22
eitally wrote: post #16

I think it's stupid to overuse the term "startup" where it doesn't make sense. At what point is something just a new small business? Is there an arbitrary set of lines that differentiate between "startups" and every other new enterprise? The vast majority of new businesses are funded solely by personal savings, friends & family, and SBA loans. Conflating something like a deodorant company with a pure play tech startu…

We could also flip that around. Startups are nothing more than small businesses. Most will fail. A few will go on to become somewhat bigger. One out of a million becomes a Ralph Lauren empire. What's the difference really between a small business and a startup?

Startup just sounds cooler, that's why - in reality there isn't a difference. A single parent starting up a hair salon or restaurant is also a startup, it's just a new business being set in motion.

Re: Consumer startups that said no to investor money

#24

Post by dcole2929 »

One of the things I really like about this article is the story of Tuft & Needle. One of the biggest reasons (imo) why there are relatively few minority founders is because of the lack of access to inter-generational wealth. If you are poor or come from a poor background it's hard to build the requisite capital necessary from a friends and family round because often times they just don't have it. Now as a founder you find a way, but still it's nice seeing a success story of a company that started with only $6k. That's money that most engineers could save up relatively easily.

Re: Consumer startups that said no to investor money

#25

Post by Stryder »

MicahKV wrote: post #17

I've been reading about VC and all it entails for years now, and it always leaves me with a sketchy feeling. Pouring so much time and effort into chasing capital, and then giving up so much ownership and being on the hook for big returns once it's finally attained... seems like a sure way to suck the soul out of any business. Not saying VC doesn't have a place in the world, but I get the sense that a lot of founders…

The nature of VC is to build portfolios. The success and failures of individual companies within that portfolio matter very little- what matters a lot more is whether the lessons learned and knowledge/IP generated can spill over to other portfolio companies to eventually produce winner(s) somewhere.

The success of the portfolio is what matters to the firm, and the returns are what matter to the LPs.

It is what it is, so entrepreneurs should use it for what it is. The hype over the past decade has been ridiculous.

Re: Consumer startups that said no to investor money

#26

Post by Stryder »

adventured wrote: post #10

I took VC for my last company. I'm choosing not to do it this time around. What I'm working on has at least a planned ten year horizon at the outset, hopefully it extends beyond that (the cost is so low to do it, I can stay in it perpetually without concern, and have decided the end goal is worth it). It requires long-term planning and thinking, there will be no exit pursued. Venture capital is a mediocre option in t…

"At that point they stopped being real investors and became financial engineers looking to play the angles to remove risk from their position and shift their risk to everyone else."

Sadly this seems to be the game being played by literally every person and their grandma these days. We need a mentality shift as a society in order to find real innovations and growth again, or else, well we're just digging our own graves really.

Re: Consumer startups that said no to investor money

#27

Post by legostormtroopr »

eitally wrote: post #16

I think it's stupid to overuse the term "startup" where it doesn't make sense. At what point is something just a new small business? Is there an arbitrary set of lines that differentiate between "startups" and every other new enterprise? The vast majority of new businesses are funded solely by personal savings, friends & family, and SBA loans. Conflating something like a deodorant company with a pure play tech startu…

I’ve always understood the distinction between “startup” and “small business” to be potential to scale and probably also potential to scale quickly.

A cafe for example can scale to be a well run efficient cafe, maybe even opening additional locations. Scaling a cafe chain globally is a generational endeavour with a staff of tens of thousands.

A company that makes cafe POS software can scale to thousands of cafes globally with a few years with less than a hundred staff.

Re: Consumer startups that said no to investor money

#28

Post by chetanahuja »

adventured wrote: post #10

I took VC for my last company. I'm choosing not to do it this time around. What I'm working on has at least a planned ten year horizon at the outset, hopefully it extends beyond that (the cost is so low to do it, I can stay in it perpetually without concern, and have decided the end goal is worth it). It requires long-term planning and thinking, there will be no exit pursued. Venture capital is a mediocre option in t…

> If there's one thing all start-ups should conspire to abolish, it's liquidity preferences.

Liquidation preferences are not the norm in the normal seed/A/B rounds etc. right now. At least not in the silicon valley VC ecosystem.

Re: Consumer startups that said no to investor money

#30

Post by hn_throwaway_99 »

eitally wrote: post #16

I think it's stupid to overuse the term "startup" where it doesn't make sense. At what point is something just a new small business? Is there an arbitrary set of lines that differentiate between "startups" and every other new enterprise? The vast majority of new businesses are funded solely by personal savings, friends & family, and SBA loans. Conflating something like a deodorant company with a pure play tech startu…

PG's definition is still a very good one I think: http://www.paulgraham.com/growth.html .

A deodorant company that sold for $100 million less than 3 years after founding is absolutely what I would consider a startup.

Post reply on HN