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Indie.vc: Unicorns Are Out, Profits Are In

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Re: Indie.vc: Unicorns Are Out, Profits Are In

#111

Post by imtringued »

nickff wrote: post #78
airstrike wrote: post #74

Earlier quoted context omitted.

Can you share more on how this applies to Ballard Power? It's a name that just came up on my radar this weekend and I was planning on doing research on them, so thought I'd ask in case you have something specific to share

Ballard's been getting government grants and subsidies for over 20 years, and produced very little in terms of saleable product on the other end. They make fuel cells and related products, but their business model seems to be mostly taking government and investor money, and using it to produce units which they 'sell' at below-cost to companies trying to look green by 'testing' alternative fuels.

That sounds like the conventional VC model of pumping money into obviously bad companies. The only difference is that this is government funded.

Re: Indie.vc: Unicorns Are Out, Profits Are In

#112

Post by imtringued »

mrnobody_67 wrote: post #104
leesalminen wrote: post #32

Earlier quoted context omitted.

I think both worlds can exist. You can have the "traditional" VCs going for the high-risk, high-reward model. And you can also have "new" VCs going for low-risk, medium-reward. As an anecdote, in 2014 we looked for ~$250k investment. We had a business model that realistically took us to ~$5mm/year revenue in 5 years. We pitched various "traditional" VCs. The overwhelming feedback we got was that nobody doubted our te…

Sounds like a good outcome. VCs need to have a chance of "returning the fund". If they are investing out of a $200m fund, and they own 15% of your company at exit after 5 years and subsequent dilution, that 15% has to have a chance of being worth $200m. Otherwise the math does't work.

The math works out because a fund is investing in multiple companies.

Re: Indie.vc: Unicorns Are Out, Profits Are In

#113

Post by imtringued »

a13n wrote: post #37

As a founder of a bootstrapped & profitable company, I don't really get what's so attractive about this funding model. It seems like it's just a really, really, really expensive loan. They make it sound nice with their anti-VC, pro-founder marketing angle. But at the end of the day, they are charging you 3x what you're borrowing.

It's not a loan because there is no expectation for you to pay the money back.

Re: Indie.vc: Unicorns Are Out, Profits Are In

#114

Post by whack »

smogcutter wrote: post #87
whack wrote: post #73

Earlier quoted context omitted.

In an efficient market, investments that are more risky will produce higher returns. If they didn't, no rational investor would invest in them. Why invest in a venture that is more risky, unless you're compensated via higher returns. You can already see this playing out in the public markets. Stocks produce far higher returns than corporate bonds, which produce higher returns than treasury bills. There's further nuan…

The point is that risk = higher return is an oversimplification. What that risk means is a significant chance of a much lower return. So if a basket of risky assets predictably overperforms... it isn’t actually that risky. Prices should rise in that case (and returns fall). Having a higher potential return and actually being +EV aren’t the same thing. Just ask any bookie.

> The point is that risk = higher return is an oversimplification. What that risk means is a significant chance of a much lower return.

Well yes. This is exactly why higher risk generates higher EV in an efficient market. Because of the significant chance of lower returns.

> So if a basket of risky assets predictably overperforms... it isn’t actually that risky

Depends on your time horizon. The S&P 500 predictably generates higher returns than T-Bills, over a 100-year time horizon. But it is still very risky to a 70 year old retired pensioner. This risk is why the S&P 500 generates higher average returns than T-Bills

Re: Indie.vc: Unicorns Are Out, Profits Are In

#115

Post by bcrl »

vkou wrote: post #57
troughway wrote: post #54

Earlier quoted context omitted.

>Canadian "venture" capital. I love this. I wish it were a thing, "The Canadian Model".

The Canadian model for business isn't all that great. It doesn't do a great job of serving the country's social needs, and it also doesn't do a great job of producing competitive businesses. There's a fair number of public funds that get funneled into unproductive firms through things like innovation grants, and there's a lot of protectionism for incompetent incumbents. All of this seems to enrich a small class of el…

Canadian banks are incredibly risk averse, and programs like CSBFP have so many strings attached that make it almost useless for certain sectors. Trying to fund infrastructure (rural FTTH) has been an exercise in futility with most Canadian banks. 75-85% loan to value ratio on fibre builds makes no sense considering the assets have 30+ years of life after being paid off in 3-4 years. But hey, we love real estate!

Re: Indie.vc: Unicorns Are Out, Profits Are In

#116

Post by yowlingcat »

EGreg wrote: post #65

Oh really! I would like to see the day. Our company, Qbix, is a poster child for the preaching of the Basecamp folks. We raised $107,000 from friends and family and then generated revenues, then another $135,000 and generated more revenues. We are up to almost $1MM in revenues now. Also we have attracted 8 million users and growing. But many VCs have turned us down because they look for hockey stick growth and zero f…

If your firm is making money (especially to the tune of $1MM -- is that per month or per year?), it might be a perfect match for the more old-fashioned form of non-dilutive fundraising: lending. There are a lot of firms out there which capped revenue based funding, but the biggest one I know is Lighter Capital [1] (no affiliation), and I believe there's a good amount of competitors [2] which do the same thing. Why not consider reaching out to them and seeing if you're a fit?

[1] https://www.lightercapital.com/

[2] https://www.owler.com/company/lightercapital

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