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I think what the author is talking about is having too much money to the point where a lot of it gets wasted before a solid business model is proven. However,

by yosho 16y ago

I think what the author is talking about is having too much money to the point where a lot of it gets wasted before a solid business model is proven. However, I still believe that seed funding is important to most startups for the simple fact that if you have to worry about paying for groceries and food, you're not going to be able to focus 100% on your startup. A 30k - 150k seed round could go a long way for most startups and I think is almost required just to get the basics covered.

brlewis 16y ago
You have a good point. I voted you up. But I also have a counterpoint. The most valuable asset you can build is a resilient founding team. Facing important problems while still building your product is good practice for what happens when a company grows. Not being able to focus 100% on all important aspects of your startup is a good situation to gain experience with. Another upside to not having funding is it forces you to seek economical ways to grow your userbase. I'm focusing on this intensely now. There are a lot of things my users would like, but I'm picking the ones that help them show my service to others.
neworbit 16y ago
The hard part lately (last couple years) seems to be that when you have business traction it's still slow to get capital to expand. Can't get it from a bank. Getting from a VC is slow. Getting from angels works if you need $100k but not if you need $800k, and angels are ironically more likely to give you money if you have no revenue but a promising idea (since if you are actually headed up the hockey stick, your valuation is higher than they want.) I've encountered a handful of companies that (claim to) have multi million dollar contracts on the table that they need $500k-$1m to execute on and can throw that off in the first year's profit. I'm intensely surprised there isn't more of a factoring type solution that provides asset-backed contract-backed warrant-sweetened lending at credit card like rates. Sort of an alternative asset class to the Series A/B raises. In fact, if anyone out there wants to put $3-5M to work that way I bet I can matchmake you with five companies in a month. (Revenueloan and On Deck Capital are the right ballpark, but don't count. Revenueloan only wants to talk to you when you already have three big deals and want capital to spin up your fourth, and On Deck is looking to do loans an order of magnitude smaller.)

by yosho 16y ago

brlewis 16y ago

You have a good point. I voted you up. But I also have a counterpoint. The most valuable asset you can build is a resilient founding team. Facing important problems while still building your product is good practice for what happens when a company grows. Not being able to focus 100% on all important aspects of your startup is a good situation to gain experience with. Another upside to not having funding is it forces you to seek economical ways to grow your userbase. I'm focusing on this intensely now. There are a lot of things my users would like, but I'm picking the ones that help them show my service to others.

neworbit 16y ago

The hard part lately (last couple years) seems to be that when you have business traction it's still slow to get capital to expand. Can't get it from a bank. Getting from a VC is slow. Getting from angels works if you need $100k but not if you need $800k, and angels are ironically more likely to give you money if you have no revenue but a promising idea (since if you are actually headed up the hockey stick, your valuation is higher than they want.) I've encountered a handful of companies that (claim to) have multi million dollar contracts on the table that they need $500k-$1m to execute on and can throw that off in the first year's profit. I'm intensely surprised there isn't more of a factoring type solution that provides asset-backed contract-backed warrant-sweetened lending at credit card like rates. Sort of an alternative asset class to the Series A/B raises. In fact, if anyone out there wants to put $3-5M to work that way I bet I can matchmake you with five companies in a month. (Revenueloan and On Deck Capital are the right ballpark, but don't count. Revenueloan only wants to talk to you when you already have three big deals and want capital to spin up your fourth, and On Deck is looking to do loans an order of magnitude smaller.)