151–160 of 363 posts
Someone investing $1M for 10% might better off buy gold or a property. It sounds good for me as a founder, but from investor point of view, this is pointless. Why taking a huge risk for 10%?
I would easily consider a positive impact along with risk and returns when making an investment decision. Not everyone would, and not everyone should, but it is a part of the funding landscape.
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> Most tech startups need a limited liability structure like GmbH (similar to LLC) or UG. Meh, do they really? Only if they want to go the VC route. But in this topic we're talking about more healthy ways to build and grow a company and for that you don't need a GmbH or GbR to start.
You are effectively locking yourself out of the outside investment route if you choose to do this.
You need to be a unicorn or you need to only take angel checks. This is not complicated.
Spend less than you earn. Maybe get an SMB loan if the numbers work. This approach is older than the tech industry.
“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.
I think there are two common definitions of startup, and neither require VCs to be involved. One (seen elsewhere in these comments) is any small business. I personally don't like that definition because there is a pretty big difference between a local coffee shop and the thing we all mean when we say "startup". The other one which is more common here is a company that is currently small, but the business model involv…
Even the Paul Graham essay defining "startups" the way he saw it said "VC funding" wasn't required: https://www.paulgraham.com/growth.html
It's just that many mentally associate "startups" with VCs and software tech because that's often how rocket-ship growth happens.
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…
Which land? Last time I checked and looked for different support scheme all that was offered in Berlin was some 90s style support for office equipment (we are fully remote) support or 1/2 salary on an intern. Truly pathetic back in the early 2024.
Berlin has different programs. An equivalent scholarship is available through ESF+ funds: https://www.foerderdatenbank.de/FDB/Content/DE/Foerderprogra...
I've also been part of HTGF and bmp funded startups in Berlin, and those two are the most active players in seed funding, if more traditional capital-for-equity is what you're looking for. Both are also experienced with augmenting their investment with EU and state (IBB) funds.
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I just founded in Germany. The paperwork is … okay. Not much more crazy than tax returns or internal accounting you need to do in any jurisdiction. But yes, running any organization is a lot of work.
Is there an opportunity to streamline the paperwork mentioned to reduce friction for founding in Germany?
But in general, not really. I also just founded a GmbH in Germany, and the paperwork really isn't that crazy, and for the more complicated parts you'll generally will want to have a tax advisor you are going to have a long-term relationship with (rather than a one-off founding service). I considered using a founding service, but ultimately, most of the "hard parts" about the process is in understanding what agency you have to talk to for what parts, which you'll have to learn anyways if you want to run a business in a way that doesn't land you in jail, so the benefits of such a service are marginal.
The only real way to streamline it would be to deregulate the process (e.g. getting rid of notary requirement).
[0]: https://www.firma.de
I think one option this approach ignores is the ability to raise, but not spend profligately and not give up board seats.
E.g. if you raise $10m, but still have $8m in the bank, a $10+8m exit is still possible. You do lose whatever percentage on top of liquidation preferences you sold, but the $10m in insurance can be helpful.
Another thing to keep in mind is that once you have competitors, the pace at which your invest and ship is not entirely up to you. If your competitors raise more and manage to ship more or out-market you, your product is going to get squeezed out of the market.
Slack is sort of the prime example in my mind here of a pretty unimpressive product dominating the space through fundraising. None of their erstwhile competitors had good outcomes because Slack just sucked all the oxygen out of that space and the only company who could really compete with that turned out to be Microsoft.
I am a big believer in Seed-Strapping. You need some initial capital to get you started (can be as low as a few months of your own salary). But you should aim to bootstrap your solution.
Being forced to bootstrap with your own funds is the best bullshit business filter I am aware of. I also think it says a little bit about the founder's ability to maintain some amount of stability in their life and put their money where their mouth is. Everyone can come up with ideas. How sure are you of yours? Are you willing to use some of your own money to prove it out? No? Then I guess I'm not that interested eit…
It really comes down to being willing to start small and grow within your means (even if that means a SMB loan or small investment).
But if you can’t find even 1 customer then it’s likely you’ve started building without talking to actual customers.
You need to be a unicorn or you need to only take angel checks. This is not complicated.
Or, you know, build a business that customers are willing to pay for… Spend less than you earn. Maybe get an SMB loan if the numbers work. This approach is older than the tech industry.
There is still plenty of opportunity to build a business that sells to customers who are collecting those angel checks (directly or indirectly). But that is dependent on at least some businesses being funded by angels.
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'Be a normal person/company and do normal person/company things,' isn't talked about very often, and it can be useful to be reminded that it is a pathway that can lead to success.
It depends very much on your definition of success. Many who grew up upper middle class would define survival as failure.