251–260 of 363 posts
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 obviously better to raise the optimal amount and no more. But things are not always so clean, and the best time to raise is when your company is killing it, not when you're running out of cash and trying to make it to profitability. 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 $1…
If you raised $18MM total in two rounds and then sell for $18MM, you're going to walk away with a signing bonus for the new company and little else, right? You can't generally sell in order to distribute the proceeds of an investment round to the company operators.
You are in a worse boat than if you had only raised the $1m and then sold for $10m, but the founders probably still walk away with ~5-7m pre-tax (depending on how much equity the $10m cost you over 1-2 rounds), and you're in a better position than if you had run through the $1m and hadn't quite gotten to a thing worth $10m.
I'm not sure that's true today. Author is a one-time founder that had some success. He exudes selection bias. Note: i'm not poo-pooing him that "oh he's only founded one company". Don't read into it that much. I'm just expressing that he has the standard hubris that any one-time successful founder would have. After that single success he's already enlightening us with his wisdom.
Of course there are such businesses, but "most" of those aren't startups. I don't think PMF is a term that even applies to such SMBs. PMF implies scale and repeatability of the sales process -- becoming a unicorn is baseline now.
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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?
Not at all. Here's how you'd go about it: * for each medium to large University, there will usually be at least one person, if not an entire org of people that will guide you through the process, manage comms with the bank and help you to frame the business plan. These institutions (what I referred to as an "accelerator" in my OP) are publicly funded. You do not pay them. * prepare your business plan (milestones, mar…
1) Are those difficult to get? Do you need to put lots of collateral into use?(like putting your personal assets/home as guarantee?)
2) Are the interest rates really in the range of 2.99 to 6.12%? For new company?
3) Is it expected that you personally pay back the full amount if the company fails?
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Are we just talking past each other here? Are you saying that it's hard to bootstrap a pure B2C business using only B2C revenue sources? Because that's not what I'd do; I'd consult to other businesses . That's what 37signals did.
> Are you saying that it's hard to bootstrap a pure B2C business using only B2C revenue sources? I said that consumers don't like to buy much these days, so business opportunities are effectively limited to selling to other businesses. But businesses can't absorb buying your wares if they can't sell to someone else in kind – eventually meaning the consumer. That is, unless they have angel money to burn. So what was a…
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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.
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.
1) India. Lots of conflicting laws. Lots of conflicting paperwork. And as a foreign company you'll probably pay more in bribes ("voluntary non-disclosed payments to ensure success") than you would in taxes, because the alternative is that they send the police after your local employees and maybe try to have the local court seize your property.
2) EU. The VATOSS is straightforward, but the income tax systems are not. Within the EU, France is the worst, followed by Belgium, Denmark, and Germany. Portugal and Ireland are very chill about tax returns. For the bad countries, there is lots of paperwork. Literally every transaction must be documented. On both sides. And they will ask for the documents when they audit. And they will challenge any cross-border transaction that results in reduced local income.
3) Africa. I've only dealt with South Africa, Nigeria, and Egypt. South Africa was the easiest to deal with, and Nigeria was surprisingly business friendly other than the constant requests for bribes. Egypt should have been straightforward (and there is a bit of language barrier), but the bribes were not optional, even to file basic tax returns.
4) South America. There's a lot of it. So much of it. In Brazil, you need certified letters just to send and receive money...including tax payments. And there's a lot of requests for bribes in other countries. But once you get past the language barrier and the logistical hassle, it's actually quite straightforward and logical. If not for the military dictatorships and drug gangs, South America would be a good place to do business (from a compliance perspective).
5) USA. Lots of laws. Lots of jurisdictions. But all relatively straightforward. It only gets complicated if you choose to minimize your tax burden (or maximize your refund) by taking advantage of the many, many complications. If your only source of income is W2 income, you could finish your tax return in 15 minutes.
6) Canada. Even Quebec, which insists on doing everything in French.
7) Australia. It's the least complicated tax system I've dealt with, and the easiest to work with as a taxpayer. The ATO is also quite easy to reach...I'm almost always able to get a human on the phone within 5 minutes.
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It's not a "regular" company, because it's still raising angel investment, presumably from the tech/startup ecosystem. A more common route for non-tech-startup companies is to get money via debt - in other words, borrow money from a bank or financiers. That's a different model to with different risk/reward characteristics, but it's how most non-innovative entrepreneurship is done, I believe - things like building res…
> because it's still raising angel investment, presumably from the tech/startup ecosystem. > A more common route for non-tech-startup companies is to get money via debt - in other words, borrow money from a bank or financiers. What do you think angel investors are if not financiers, and what do you think those investments are if not debt? The only difference is that in the software- and software-adjacent world everyo…
No, those are equity investments, usually. It's a different thing with different rules.
Equity investments give the angel investors ownership of the company - equity. This is either direct selling of shares of a company to angels, or (more typically nowadays) via instruments like convertible notes, which convert to equity in future funding rounds. Other than this ownership stake, they are typically not entitled to anything else.
Debt investments, on the other hand, don't give any ownership to the financier. They only entitle them to receive some future payments from the borrower.
These are completely different things, and large companies often use a mix of both. But in startup-land, the typical investment is done via equity.
First time on substack, apparently first time writing also. Enough undefined acronyms to get an 8th grader smacked.
That sentence (yes, ONE sentence) is some of the worst I've seen.
https://paulgraham.com/growth.html "A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth."
PG is great in many ways but he's not the person I'd turn to for an unbiased opinion on what counts as a "startup."
The founders I'm particularly impressed with are the ones who have such a nuanced understanding of capital efficiency that they do not require VC, and only take money much later in the cycle when they can basically dictate terms and want hundreds of millions for liquidity or whatever (see, e.g., Joe Mansueto).
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I guess I have a different view on this... I feel like you left out that the past 20 years has also seen enormous success in this industry, even to a historically unprecedented degree. You listed a number of things that have been super hyped flashes in the pan that never really panned out (or in the case of self driving cars, have taken way longer to pan out than people expected), but you didn't list the things that…
> It's certainly difficult to predict which hype-y things are going to mature into sustainably large markets, and which are going to fade into obscurity, but a model of "things that are hyped are doomed" is not predictive Perhaps this is where we differ. I offered a list of things that, granted IMO, were all hype with little substance. Or perhaps just on a timeline so long that many people got the hype timing wrong.…
We don't often see that because it gets totally drowned out between cynics and moralist scolds battling vapid hype-bros and pumpers, and also because it's boring.
It turns out there's actually a lot of tedious classification, OCR, entity extraction, and enterprise search to be done.
Amusingly much of the money made in SaaS was also in boring products!