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Tell HN: My startup is making money and I don't know what to do

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Re: Tell HN: My startup is making money and I don't know what to do

#21

Post by sthielen »

cglee wrote: post #13

First, decide if you really need to raise money. Can you bootstrap (ie, self fund) your business? Too many people immediately go for capital when they don't need it. It's extremely distracting and not all that necessary. You should only look into raising capital if you have a capital constrained opportunity or problem. So many problems initially look like money problems, but they're really disguised as something else…

We've been bootstrapped since the beginning, but, as much as we don't want to admit it, we're starting to outgrow what we can do as our very limited personal savings start to decline. Yeah, it's cool to have some money in the bank after doing these advertising deals, but it's not nearly enough that it's sustainable right away.

We have plans to expand to 150 schools across the country, and if we do that we project to be cash-flow positive within 6 months. But right now we don't have enough resources to expand to even 10 schools and try and maintain that. And especially with how our demographic (college students) respond to word-of-mouth with services like these, we really want to be available to as many students at as many campuses as possible before we lose any "buzz" that we're cultivating (either organically or through marketing efforts).

With regard to legal documents and accounting and all that, we have an LLC right now, with Quickbooks and a boilerplate operating agreement that I found in a book at Barnes and Nobles. I definitely agree that it is incredibly important to be on top of the legal side of things, but we honestly don't even have the money for that right now.

Re: Tell HN: My startup is making money and I don't know what to do

#22

Post by webmaven »

sthielen wrote: post #5
illini123 wrote: post #4

Have you raised a family and friends round? What amount of capital are you looking for? If you just launched 3 months ago, I'd say seed level, but I don't have enough specifics on what you need / burn rate to judge. Depending on where you're based, I would look at getting in touch with some of the angel investing syndicates. Also, be realistic about the runway you're giving yourselves. My personal philosophy is to me…

We haven't raised anything. We're three broke college students who have been putting everything we have into keeping this thing going. We're planning to expand to 150 campuses and bring on some people to man the phones/maintain our property listings, as well as hire campus reps/brand ambassadors at 20 key schools from that set of 150. Our 1y budget for all of this is And yeah, we're based in LA, but we're all new to…

Do you really need to roll out to 150 campuses in one year? Use the profits from your first to roll out to a 2nd, then use the profits from 1+2 to roll out #3, etc. BTW, for each new city you roll out to you should be trying to figure out how to do it better.

When you've proved you have a repeatable, scalable model, you can take on investors to accelerate the growth.

This is more or less what FB did.

Re: Tell HN: My startup is making money and I don't know what to do

#23

Post by factsfinder »

First of all make an app on Android and iOS platforms. Then give your venture a piece of advertising. Meet a bunch of investors, convince them , choose the best of them that suits your needs and get it done. Soon you can be a billionaire. SO what are you waiting for just do it already. Thank you :)

Re: Tell HN: My startup is making money and I don't know what to do

#24

Post by rwhitman »

To have such a slam dunk in the apartment rental space, and such big wins selling advertising to small businesses so quickly, thats huge.

I've met so many people over the years struggling so hard with products trying to get in on this market and never making a dent.

The product design is top notch too. No wonder its a hit. Congrats

Re: Tell HN: My startup is making money and I don't know what to do

#25

Post by ericcholis »

rhizome wrote: post #6
sthielen wrote: post #3

Earlier quoted context omitted.

We've never raised money before this. We definitely want to do some kind of seed round, but we don't really have the connections to find the right people. We're all new to this game. We went to a few "pitch nights" back in March when all we had was an idea and a barely functional MVP, but they're all really theatrical and honestly we'd rather just sit down and talk with someone. We just don't have a clue about how to…

Why do you want to raise money (i.e. sell part of the company)? It sounds like you can grow organically, maybe raising your prices is in order?

Agreed, it seems like money might not be the barrier here. It also sounds like you are still bootstrapping (so to speak). You've identified a market, which seems to grow organically.

Some (traditional business) problems you might have.

- Sales. Looks like you need boots on the ground to get small businesses to advertise and owners to list property

- Acquisition. How are customers (ie renters) finding you.

- Advertising? Are you at the point where you need to spend money to advertise? Small scope might be useful here: local ads, flyers, etc...

My suggestion, target your next (physically close) market, apply and refine your existing strategy. Find a more remote market, and see what's required to replicate your local success.

Re: Tell HN: My startup is making money and I don't know what to do

#26

Post by sthielen »

ChuckMcM wrote: post #20

Are you paying yourselves salaries? Do you have an actual office? Benefits? etc? I would suggest that you not get ahead of yourself with "making it big" and instead focus on making it a solid business. Get to the point where you're paying yourselves and everyone who works for you a market rate salary and benefits, and you have office space, and you're cash balance is growing. Basically this is the classic definition…

No salaries, no office. My two cofounders and I have been throwing everything we've got into this; we're all broke.

Our business model requires people actively maintaining property listings at each school, and then growing student traffic at that school and then, once we're established, securing advertisement deals.

Our rationale behind raising funding is that we can either cut corners and struggle and keep adding one or two schools a month until it's simply impossible for three people to maintain, or, with a little bit of money behind us to do our own advertising, have someone making cold-calls to collect properties, and have a student representative on the actual campus helping us brand locally, we can streamline the process and achieve the kind of wide-spread adoption we need in order to secure large advertising deals (right now we target our placements toward local businesses, but once we are established we'll be able to secure deals from places like banks or office supply retailers).

Re: Tell HN: My startup is making money and I don't know what to do

#27

Post by rexreed »

ixmatus wrote: post #18
cglee wrote: post #13

First, decide if you really need to raise money. Can you bootstrap (ie, self fund) your business? Too many people immediately go for capital when they don't need it. It's extremely distracting and not all that necessary. You should only look into raising capital if you have a capital constrained opportunity or problem. So many problems initially look like money problems, but they're really disguised as something else…

Getting into an accelerator or incubator (even if it's one that's not popular) can really help with the legal stuff since you'll be able to get more advice and they will always have those boilerplate docs for you. Form a C corp in Delaware and get the ownership figured out ASAP. I also generally think that all of the founders should vest (no cliffs or anything, but a four year vest for everyone will keep the company…

Agree with the above - altho forming a Delaware C Corp at this early stage is not necessary. It's become much easier now to form an LLC in your state of residence and convert at a later stage (if at all) to Delaware C if you end up raising money.

Re: Tell HN: My startup is making money and I don't know what to do

#28

Post by hoopism »

sthielen wrote: post #14
hoopism wrote: post #9

How do you plan on replicating in the new cities? Is the unique element in this equation (it's certainly not the space that is novel) you and your team? Track record goes a long way. You've proven to be effective in a very small 'niche'. You may want to consider taking seed (if needed) from F&Fs and then prove it in another city. You may find that expansion step to be useful. It will also help answer the question of…

We're actually at three schools in California--Loyola Marymount University in Los Angeles, Chapman in Orange, and the University of San Diego. We've been able to replicate our success pretty similarly in three unique areas, and have plans for Campus Reps/Brand Ambassadors to help us out "on the ground" at some of the larger schools we're planning on targeting.

I didn't mean to sound dismissive. I think the early success is great. But I anticipate that the biggest question is going to be "will it scale?". Investors know that it's trickier than 1m+ bucks and some ambassadors. So if you can prove out that you have a model that works (and actually prove it to yourself) then you eliminate a big barrier in funding.

This is not a new model. The issue is it's VERY hard to scale. Proving it as much as possible before walking into a pitch will change the dynamic drastically.

You may also find that it does not scale as well as you hopes... or that managing college kids and relying on them to grow your business is not always reliable (that's a tough one).

Re: Tell HN: My startup is making money and I don't know what to do

#29

Post by santoshsankar »

While everyone has suggested bootstrapping, friends and fam, local angel groups and Angel List, have you tried your university?

Many large public institutions have launchpads and accelerators (they just don't always market it well). This could be a natural fit for them.

I think like most people are echoing, continue to fund it out of pocket (maybe with the help of family) to get it to be the best product possible. From there, slowly build out into other geographies. You can learn lessons from your early expansions so as to not repeat it. Given the product is still young, there is likely a good amount you can build on prior to scaling out.

Good luck and will def be monitoring University Niche

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