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There is no source of capital that is aligned with founders who want to build a healthy, sustainable, profitable business. Positive cash flow is the best sourc

There is no source of capital that is aligned with founders who want to build a healthy, sustainable, profitable business. Positive cash flow is the best source of capital, IMHO. If you can't manage that, or you need extra capital to grow the business, what about turning to banks as a source of capital? After my company (not a tech startup) hit the 5-year mark in the state corporations database, I started getting offers from banks, PayPal, and even Amazon, two or three times per week. They don't want equity. They don't want a seat on the board. They don't want to tell me how to run my business. They just want the interest and a relationship that might lead to more business down the road.

jaxn 8y ago
And personal guarantees and a lein on your house.
- ilamont 8y ago
  There are always strings attached when money changes hands, whether it's a bank or an alternative funding vehicle such as Earnest Capital. In its post, this statement stood out: All of the terms or figures are subject to change. Any specific figures would change significantly depending on the stage of the business, founding team and current levels of traction. Phrases like "terms subject to change" + subjective, easily discounted appraisals of things like "team" and "traction" are the types of venture BS that many bootstrappers want to get away from. Moreover, the post says they "primarily" want to extract dividends from the companies they invest in. What happens when those dividends dry up, or the company needs to make a choice between paying out dividends and using that money for some other important purpose? Salaries get docked?
  - tylertringas 8y ago
    Our structure is 100% aligned with the founder. If they founder(s) take profits, we get a share of that. If it makes more sense to reinvest profits or if there currently aren't profits, we don't get paid and we do our best to help the founders in any way we can. We definitely would not be trying to go after salaries to increase profits (nor would we even have any mechanism to do so... no board seat or equity control).

jaxn 8y ago

And personal guarantees and a lein on your house.

ilamont 8y ago
There are always strings attached when money changes hands, whether it's a bank or an alternative funding vehicle such as Earnest Capital. In its post, this statement stood out: All of the terms or figures are subject to change. Any specific figures would change significantly depending on the stage of the business, founding team and current levels of traction. Phrases like "terms subject to change" + subjective, easily discounted appraisals of things like "team" and "traction" are the types of venture BS that many bootstrappers want to get away from. Moreover, the post says they "primarily" want to extract dividends from the companies they invest in. What happens when those dividends dry up, or the company needs to make a choice between paying out dividends and using that money for some other important purpose? Salaries get docked?
- tylertringas 8y ago
  Our structure is 100% aligned with the founder. If they founder(s) take profits, we get a share of that. If it makes more sense to reinvest profits or if there currently aren't profits, we don't get paid and we do our best to help the founders in any way we can. We definitely would not be trying to go after salaries to increase profits (nor would we even have any mechanism to do so... no board seat or equity control).