91–100 of 320 posts
A big chunk of the classic Middelstand is something physical, not knowledge work.
And startups turn that effect up to 11. Either it works or it doesn't. It is by its nature not conducive to middle ground.
- bootstrapping is very hard
- traditional credit/loans aren't structured well for the "mid" type risks of starting software businesses (not much collateral)
- and on the VC side there is much less opportunity for the Unicorn 1 in 10 exits.
Tackling this problem are two funds that I didn't see mentioned in either the article or the comments so far: TinySeed and Calm Fund.
https://calmfund.com/shared-earnings-agreement
Broadly both invest much less than a traditional VC would and are compensated differently. The details are different (and matter) between the two but it's more along the lines of profit sharing than looking for big exits.
Earlier quoted context omitted.
Local banks can provide the capital, often collateralized by your house. Also small business loans from the government and accelerator awards can provide 6 figure amounts. I know some "generic" business people who are fairly wealthy and they own things like food franchises and apartment complexes. There are many paths to becoming rich that don't involve VCs and billion dollar exits. 99% of entrepreneurs don't talk to…
My question is why does everyone with the next CRUD SaaS app think they need to hire the “best people”? I’ve seen plenty of job openings where companies want “ninja rockstar 10x developers” to write what ends up being something that anyone who knows the latest MVC framework with three years of experience can do competently. And most “entrepreneurs” who own franchising are barely middle class and “bought a job”. The a…
Back at my peak. Me and another guy got a new startup to 1,000 paying clients in b2b space in 2 years. We had a few “regular” guys that helped out, but they would have taken 20 years to do what we did.
Earlier quoted context omitted.
Totally considered. I did my bootstrapped startup while working a day job for the first year. The point is the value of your free time is 250k/yr. If you are smart and motivated, your time is incredibly valuable regardless of what your employer is paying you -- because you cannot easily hire that skillset with VC money. In my case, when I was raising in 2012, the typical VC line was "go move to SF/SV and work for ram…
I mean the problem is not only poor people. It is that access start at 250k a year which is really hard to get even in tech. The reason it is harder in tech to get funding for these good ideas that could be profitable has multiple factors 1. As pointed, decoupling of relationship between entrepreneurs and "old money". This could be rebuilt even a the local government level with reach out actions 2. The untangibility…
>> 2. The untangibility of tech assets make banks loans near impossible to get
Avoid bankloans and explore PIPE financing or similar non-dilutive financing
>> It is that access start at 250k a year which is really hard to get even in tech.
Not really. If you aren't VC funded, you can hire anywhere and anyone. You make the rules. At that point, you can hire in India, Indiana, Ukraine, Pakistan, or Pennsylvania. You get a lot for your money. We hired entirely outside major markets and saved a lot. Unfortunately once you go the VC route you get forced into hiring expensive talent and end up burning money.
Id love to reach out offline, we should chat!
If we end up in a world where 90% of the population are struggling to meet basic needs, 0.1% live off generational wealth and 9.9% act as a highly technical servant class, then there will be fewer innovators and fewer innovations.
Businesses that are shooting for the "middle class" (say, less than $50M in earnings at their peak) are of course possible and healthy and good for the economy. What's missing in this analysis is that those businesses are not going to be "founder-friendly" the way that the prototypical YC-seed-stage startup is. To use the article's definitions: * "Bootstrapped from zero" is, of course, founder-friendly - no investors…
I think this would be much more healthy than the multi-phase aim-for-the-moon approach everybody takes today. And quite likely brings better results for both the investor and the founders. If the business is already on the path to a small profitability, it is much more likely to get into large profitability than something that wasn't even started. And much less likely to get into a total loss. Your points also seem a…
Healthy for whom?
- startups founders?
- angel investors?
- VCs?
- national economy?
- financial markets?
- ...
Businesses that are shooting for the "middle class" (say, less than $50M in earnings at their peak) are of course possible and healthy and good for the economy. What's missing in this analysis is that those businesses are not going to be "founder-friendly" the way that the prototypical YC-seed-stage startup is. To use the article's definitions: * "Bootstrapped from zero" is, of course, founder-friendly - no investors…
The key is that Mittelstand businesses are much less likely to fail. (This is why PEs on average outperform VCs. I go into these economics in my post.) This can be the Goldilocks deal for founders where you raise And being VC-backed is only great if you're one of the winners. If you're one of the >90% that's written off, you're back to zero. I hit the wall at Series B with my startup Labdoor. We pivoted to profitabil…
I think you're getting at the crux of it here. The question is, how does one of these businesses "prove" to investors that they are less likely to fail? The failure rate for new business starts is famously high, whether that business is a tech startup chasing unicorn status or the corner deli. I think this will manifest itself in the due diligence phase, bringing back a bunch of things that tech founders have eschewed: detailed business plans, fundraising towards specific initiatives (as you point out in your post), and harsh measurement of progress towards those goals in board meetings with rapid consequences if goals are missed.
This post is describing a structural issue on the funding side of new ventures: - - bootstrapping is very hard - traditional credit/loans aren't structured well for the "mid" type risks of starting software businesses (not much collateral) - and on the VC side there is much less opportunity for the Unicorn 1 in 10 exits. Tackling this problem are two funds that I didn't see mentioned in either the article or the comm…
I feel like this is just trying to rebrand “lifestyle businesses” or small businesses in general. Where I grew up it wasn’t uncommon for people to have businesses that did a few million in sales and the whole family worked at. While not as sexy as getting angel investment, it sustained a quality of life that met their needs. In order to run a successful business you don’t NEED mass profits or VC dollars.
I'm trying to split SMB into two categories. Lifestyle small businesses are great too, but I'm really talking about companies with $10M+ revenue potential. You can get top-tier VC returns by building a portfolio of Mittelstand businesses ($10M-$1B in revenue).