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A startup doesn't need to be a unicorn

mattgiustwilliamson.substack.com

121–130 of 363 posts

Re: A startup doesn't need to be a unicorn

#122
post #77

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

It's also connected to so much bureaucracy that you almost need to hire someone for that alone, because you wont have as much time for your actual business. Founding a company in Germany is so much unnecessary paperwork its crazy. Single handedly the only reason I will never try it in my home country.

Technically, you can just ask your co-founder if they want to found a company with you and if they say yes, you did it.

Re: A startup doesn't need to be a unicorn

#123

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

Parts of this feel a lot like Canada's SRED program, which is intended to be a subsidy for technology research but the expected bureacracy has spawned an industry of consultancies that work solely to find marginal & questionable activities within companies that qualify. It can be worth it for a company to jump through the hoops - especially if they get something while another company does all the work - but it's an incredibly inefficient way to grow tech businesses.

Re: A startup doesn't need to be a unicorn

#124

Earlier quoted context omitted.

Are you talking about the "Gründerstipendium"?

Yes, ego.-START: https://www.ib-sachsen-anhalt.de/gruender/neue-existenz-grue... (just of the programs)

So Founder's scholarship: 2,000 euros per month for a period of max. 18 months?

Wow, much better than I expected. How difficult is it to get this scholarship?

Re: A startup doesn't need to be a unicorn

#125
> even a relatively small deal would produce a life-changing outcome for the founding team.

I run a SaaS with a business partner and this is basically our thesis for getting rich. My saying around this is "This amount of revenue/profit will cause a company of 500 or 1000 to go bankrupt, but it will make a company of 5-10 filthy rich"

Re: A startup doesn't need to be a unicorn

#126

“Startup” implies VC-backed company. And VC’s invest in companies to get a 100x return. Which almost by definition means, if you run a startup - you need to get it to become a unicorn for it to be successful. Otherwise, why take VC money … and just bootstrap it instead.

Most venture capital is invested into companies with traditional business models, not extreme growth ventures.

Most startups are still traditional business model. Every company was once a startup.

My local supermarket was funded by the people living in the community, each buying a few shares. I don't think any of them expected 100x return.

Re: A startup doesn't need to be a unicorn

#127

Earlier quoted context omitted.

Bureaucracy is crazy in Germany. Forget about doing anything online, paper and in person only. Founding any form of limited company is expensive and complicated. Want to put a website online? Have fun putting your full name and address in the imprint. Want to offer some courses that teach X? Yeah, no, you need a license for that, mate! Also being self-employed you lose most social benefits. You need to get private he…

While I completely agree with many of the points that you made, I disagree with some: > Bureaucracy is crazy in Germany. Forget about doing anything online, paper and in person only. The latter point has nothing to do with bureaucracy. > Germany is also one of the least friendly countries for expats. And I say that as a native Germain. Officials will refuse to speak English to you. Yes, refuse. For example in the USA…

> For example in the USA, they will refuse to speak German with you. So what?

Actually they would most likely be delighted to show off their German if they knew any. But that is besides the point. English for better or worse is the current international language.

I can found a new company in Estonia in literal minutes without speaking a single word of Estonian and without being physically present in the country because the whole process is digital and in English.

If you want to attract international talent you have to adapt.

> The German word "Freund" (commonly translated with "friend") has a different meaning than the English "friend" - the relationship goes much deeper. I don't think that Germans are not open to making new "Freunde", but if you want to have shallow, superficial relationships, Germany is not the ideal country. Vice versa, if you want to have deep relationships, you will likely be annoyed by the USA.

Yeah, Americans have only superficial friendships, only us Germans know the value of real friendships. (Sarcasm)

You are not wrong about there being subtle cultural differences but it isn't an either or. You can value deep friendships but still be friendly towards acquaintances.

In the end it doesn't matter the reason. If expats feel like Germans are acting coldly towards them and have a bad time in Germany, that is what they are feeling. It doesn't matter if there are good reason for that or if Germans didn't even intend to act coldly. It just fact that Germany is often seen as one of the least friendly countries for outsiders. Not everyone, some do find it easy to integrate but most don't.

I sick of the chauvinism is see from other Germans. Our culture isn't better or worse than others. We certainly have many areas we could improve.

Re: A startup doesn't need to be a unicorn

#128

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

Only applies to people with a degree. Institutionalised nepotism. Just like how your chamber of commerce keeps out the competition. Typical western decay/corruption. Closing the ranks and drawing in other peoples money.

Re: A startup doesn't need to be a unicorn

#129
post #77

Earlier quoted context omitted.

It's also connected to so much bureaucracy that you almost need to hire someone for that alone, because you wont have as much time for your actual business. Founding a company in Germany is so much unnecessary paperwork its crazy. Single handedly the only reason I will never try it in my home country.

Not true. Go to your hometown administration, pay 35 Euro and leave 15 minutes later with a "Gewerbeanmeldung" which enables you to start doing business right away.

You are lying by omission.

The Gewerbeanmeldung typically registers you as a sole proprietor (Einzelunternehmer) or GbR (partnership). Most tech startups need a limited liability structure like GmbH (similar to LLC) or UG. Those require notarized founding documents, minimum capital requirements (€25,000 for GmbH), and a commercial register entry (Handelsregister)

The simple Gewerbeanmeldung structure is problematic for venture capital because most VCs require a corporate entity structure (GmbH/UG) and converting from a simple structure to a proper corporation later can trigger tax consequences.

At each investment round all shareholders must appear before a notary or provide notarized power of attorney, the entire investment agreement must be read aloud by the notary, changes to company documents require notarization, and each notarization costs thousands of euros and creates delays.

Major decisions which are likely to affect shareholders require formal shareholder meetings with proper notice periods. Unanimous consent is often required for key decisions. Capital increases must be executed through complex formal processes. Registration with the commercial register takes weeks. Minimum nominal values of shares restrict flexibility. Required reporting to tax authorities is extensive. I can go on and on. And don't even get me started about German employee stock option plans.

Re: A startup doesn't need to be a unicorn

#130
post #77

Earlier quoted context omitted.

It's also connected to so much bureaucracy that you almost need to hire someone for that alone, because you wont have as much time for your actual business. Founding a company in Germany is so much unnecessary paperwork its crazy. Single handedly the only reason I will never try it in my home country.

Not true. Go to your hometown administration, pay 35 Euro and leave 15 minutes later with a "Gewerbeanmeldung" which enables you to start doing business right away.

That feels like an exaggeration. I did that last year. They took several months to process the registration itself.

And this was just to freelance as a developer. In my case I was allowed to start while they were processing the registration. But had it been something that would require their permission, I'd have to wait several months before I could start my business, while they wave through a form that basically says "I'll be selling goods".

I'm not one to blindly hate on all bureaucracy. But in this case it feels unnecessarily complex.

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