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How to proceed when you run out of cash, but you still believe?

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Re: How to proceed when you run out of cash, but you still believe?

#81

Post by aldamiz »

AndrewKemendo wrote: post #59

I empathize completely with this team because my company was in a very similar situation in 2018. We had two very technical computer vision products, had found traction and a growing enterprise user base but revenues didn't grow fast enough and all of the major companies were entering the market. We were lucky enough to find an acquisition off ramp last year but all of the feels are the same. The big takeaway I learn…

Hey AndrewKemendo, such a great comment, so many points to think about. Thanks for sharing!

Re: How to proceed when you run out of cash, but you still believe?

#82

Post by nikanj »

tenpies wrote: post #61
jassmith87 wrote: post #58

Earlier quoted context omitted.

Seed and Series A is investment in the people always. They assume if the product doesn't work the team will pivot until they find something that does. It sounds to me like your friend failed to pivot when needed.

Not even. I'm seeing seed and series As/Bs on unproven teams of recent graduates with no experience in the field where the "start up" operates. No business plan, no prototype, huge regulatory walls to climb. It is worst than tulip mania.

Funds make money on failed investments too. I'd be happy to throw away someone else's money, if I got to keep 20% as a management fee - and a slice of the profits in case one of my lottery tickets is a winner.

Re: How to proceed when you run out of cash, but you still believe?

#84

Post by jkuria »

dwrodri wrote: post #26

As someone who is interested in one day starting my own business, I have nothing but respect for someone who has the guts to follow through with that and pursue their vision. That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model? Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be…

Google didn't have a business model when they started but they were sure they were building something useful. I don't know much about fashion and I don't know if what they have is truly useful, but I respect them a lot and will see if I have contacts I could introduce them to.

Re: How to proceed when you run out of cash, but you still believe?

#85

Post by t222 »

nostrademons wrote: post #53
t222 wrote: post #51

Earlier quoted context omitted.

> The real question is who invested, and why? This always baffles me the most. Who gives money to a startup without a business model? I guess they just have funds to throw at the wall and hope something sticks.

Startups with scalable, repeatable business models are basically not startups anymore, since the whole point of a startup is to search for scalable, repeatable business model. And valuations match that: once the startup has actually found a scalable business model and is in its growth phase, expect to pay $100M or more for it, sometimes into the billions.

That's why bubbles pop I guess.

Re: How to proceed when you run out of cash, but you still believe?

#86

Post by aeturnum »

jkuria wrote: post #84
dwrodri wrote: post #26

As someone who is interested in one day starting my own business, I have nothing but respect for someone who has the guts to follow through with that and pursue their vision. That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model? Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be…

Google didn't have a business model when they started but they were sure they were building something useful. I don't know much about fashion and I don't know if what they have is truly useful, but I respect them a lot and will see if I have contacts I could introduce them to.

Google's initial funding, when they did not have a business model, was around 1 million dollars. By the time they got a significant chunk they had decided to use ads to try to monetize. Not all useful things make sense as income generating businesses.

Re: How to proceed when you run out of cash, but you still believe?

#87

Post by dazhbog »

Haha, that is exactly what is going on with us now. We just launched our first Kickstarter[1] and its not going well.

We will go ahead, eat ramen, and pursuit this, and its a HW product. Wish us luck.

[1]: https://www.kickstarter.com/projects/pycno/pulse-building-sm...

Re: How to proceed when you run out of cash, but you still believe?

#88

Post by alexhutcheson »

StillBored wrote: post #79
vechagup wrote: post #74

Earlier quoted context omitted.

Yes you can. It's called a small business loan. See https://www.sba.gov/funding-programs/loans and https://www.bankofamerica.com/smallbusiness/business-financi... . You'd finance your dry cleaners with debt rather than equity because (unless you are starting a chain) you are not shooting for the massive, near-zero marginal cost scaling that the venture capital model focuses on. Instead, the bank looks for a modest, p…

Yah, but re:wework, throw in a dry cleaning app that schedules a dirty laundry pickup and suddenly the valuation goes from marginal to billions. Especially if you get some machine learning in there to detect spots (or something).

http://nymag.com/news/features/laundry-apps-2014-5/

Re: How to proceed when you run out of cash, but you still believe?

#89

Post by __jal »

Analemma_ wrote: post #67
bobloblaw45 wrote: post #64

Earlier quoted context omitted.

I know this might sound stupid but if you can get that much for something that wow's people, can you get like 100k for a "meh" idea? Like if you wanted to open a dry cleaners.

No, because the mania for throwing money at tech startups is specifically because of tech's unique promise of both worldwide scale and zero marginal costs after the initial Big Spend on capex, and hence potentially gigantic returns for investors. Now, how well the current crop of startups is delivering on that promise is an exercise left to the reader, but it's there in theory. A dry cleaner has marginal costs and no…

> tech startups is specifically because of tech's unique promise of both worldwide scale and zero marginal costs

This theory fails to adequately explain WeWork.

I mean, I think you should be right, but in principle I do not see why WeDryClean should not work while WeWork does.

Re: How to proceed when you run out of cash, but you still believe?

#90

Post by streetcat1 »

chrisgarand wrote: post #62
t222 wrote: post #48

Earlier quoted context omitted.

Asking the real questions. > That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model? Biggest mistake IMHO. But is quite common these days. Everybody is chasing the unicorn dream.

It's important to consider that most businesses that start in new areas/ try re-defining the market don't have business models, as they are too small to build a model from. Sure they can bootstrap from one idea to the next until something takes hold, but unless it's a new paradigm that is on the cusp, you're many years (think 5+) from attaining a scalable model. The funding is to be able to hire people, and iterate q…

Startups should not create new markets. Too risky. Do what amazon/google does, just with a twist.

You dig where the gold is.

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