8 ms·

Earnest Capital Trailhead

162 points by sahillavingia 6y ago

tylertringas 6y ago
hey folks, I'm the founder of Earnest Capital and love to hear questions or feedback. The gist here is I think the way we make founders pitch investors is pretty lame and we can do better. Definitely a v0.1 of our thinking here and would love suggestions for how to take it further.
- EGreg 6y ago
  Tyler, this is really innovative. The VC model needs rethinking, aligning more with founders, and along the lines of what you're doing here. Your mentor model works great also. As a founder of a company that has gotten to 8 MM users across 95+ countries, and $1M in revenues, and there is a lot more I can tell you in a private conversation. We've applied to VCs along the way, but the model is not always aligned with companies like ours, which make revenue from the beginning rather than hockey stick growth and zero revenues. One of the major reasons is that these kind of startups often need small amounts to get to the next level, but the due diligence of a VC sometimes costs more than that amount. If there was a "roadmap" model that VC would fund, say, $10K to get to the next level, then $20K, etc. and if it falls short, then they have to seek another such VC and syndicate. A bit like taking on lenders except it would be more along the lines of your Shared Earnings Agreement + Equity. Everything would be clearly spelled out, and rather than spending tons of time on due diligence, it would just be about a history of execution. PS: We filled out your "regular" application in early April, please check email from @qbix.com ... would love to talk next week. PPS: If you're a startup founder chime in and add your 2c, does your own experience in early stages resonate with what I've said? That if you were able to break down what you need to get to the next level, in $10K and $20K increments, with a second or third chance on slightly worse terms, you'd be happy to be funded in that manner, and work hard to make serious progress and document it.
  - loceng 6y ago
    It's likely not worth the time investment to them for whatever return you'd be offering them for each $10k to $20k increments.
    - EGreg 6y ago
      Under the current model, that is correct. That’s like paying a UBI of $300 a month vs paying a whole department doing means testing for $100/month and then paying $300 a month of welfare to those who qualify. May as well do something more automated and send the money. Like what Tyler is doing here — collecting info over time. Make the entrepreneur spend most of the time providung the due diligence in the format you want. They have the time not the money — and it is reusable for other investors too. It should be a portal. Like the “Prizes, not Patents” debate. Same thing.
      - loceng 6y ago
        Another thought I had: they don't want to help you succeed in small increments because then you're 1) not likely to need their help any longer (they don't have you on a metaphorical leash), and 2) the more successful you are the more leverage you have in negotiating and could find other suitors to fund you at better rates.
        EGreg 6y ago
        Well, I think there are different kinds of VCs. And anyway, as usual there is a way to address this... they can just get options (but not obligations) to have preferential rights in follow-on stuff, such as right of first refusal.
- deleted 6y ago
  [deleted]
- zomglings 6y ago
  I suggest you make "Early stage investing for bootstrappers" more prominent on the Trailhead announcement page. It wasn't clear to me what kind of companies you invested in and at which stage until I read HN comments and looked around your site a bit. I really like where you are going with this. Trailhead seems to be a formalization of the method that has worked best for my startup: keeping investors in the loop as to the development of our company, soliciting and then incorporating their (usually very valuable) feedback when we need it, and being transparent about where we are in terms of a raise. Really great idea, and I hope more investors follow in your footsteps.
burlesona 6y ago
This looks pretty cool. The experience of doing this sounds very similar to participating in YC Startup School. > You can leverage the Founder Summit forums for feedback from the Earnest team and our broader community of awesome founders and mentors (a free trial is included for everybody on Trailhead). I’m not familiar with the founder summit forums, but this sound sounds similar to the community aspect of Startup School. You mentioned that people get a free trial, but it sounds like someone can sign up for trailhead and stay in it for the long term without ever deciding to raise the earnest. What do you guys do in that case? When does someone get kicked out of their free trial? :)
- tylertringas 6y ago
  Thanks! Definitely pulling on the same thread as Startup School (though I've never done it myself). Some structural differences might be 1/ this explicitly designed to be a replacement for the application process at Earnest. Over time you build up a profile that contains most of what we need to make an investment decision. We'll still need to chat and do diligence, but we're trying to remove a lot of the uncertainty around what should be in a pitch and when to time the pitch. Basically pitching is not a skillset we optimize for at Earnest (since most of the founders we back not intend to raise continuously more rounds of capital). 2/ This is explicitly opinionated in structure. Everything will intentionally skew towards our "funding for bootstrappers" strategy vs being generic advice. This should help founders decide if they are a fit for working with us long-term. 3/ This is not a "how to build a business" process. It's much closer to "here is a bunch of questions and prompts that we have found valuable to strengthen founders' thinking and strategy + some resources"... we're not here to teach you how to build a business with this. > You mentioned that people get a free trial, but it sounds like someone can sign up for trailhead and stay in it for the long term without ever deciding to raise the earnest. What do you guys do in that case? When does someone get kicked out of their free trial? :) good question. this is subject to experiments/change but the way we're thinking about it now is 1) Founder Summit remains a paid community (we are still a small fund and this allows us to hire an awesome team + pay people for workshops, etc) 2) We want to avoid a "pay to pitch" scenario so Trailhead folks get a 3-month free trial. 3) At the end they can choose: don't apply to Earnest but stay in the community and pay, apply to Earnest (portfolio co's get free access), or decide they've gotten what they need and move on from both.
arvidkahl 6y ago
I really appreciate how this is an inversion of the "time-honored tradition" of making founders do loads of extra work within arbitrary deadlines in addition to growing their company. Too often, this is more a one-sided scramble (resembling an "audience with the king") than a mutually respectful conversation. It's really promising to see that you value the time of the founders you fund so much that you are ready to talk to them in a way that suits them, not just you. I like this.
- tylertringas 6y ago
  Thanks! The gate-keeping / "kiss the ring" approach to raising money has got to go.
  - gumby 6y ago
    Investors need companies but often don’t act like it. I go to LP meetings from time to time and it’s fun to see the inversion.
    - tylertringas 6y ago
      Agreed. But also, the way raise money for Earnest is very similar to Trailhead: https://twitter.com/tylertringas/status/1260972763285774337?s=20 https://twitter.com/tylertringas/status/1260972763285774337?... Build a relationship and have a discussion over time is so much better for all parties vs "pitch me right now and I'll decide instantly"
    - scopendo 6y ago
      Reminds me of the way many landlords seem to treat their tenants.
      - edoceo 6y ago
        Tenants much easier to replace than finding a good company to invest in.
jrenshaw 6y ago
Looks interesting, but curious about the name. Trailhead is a fairly well known trademark of Salesforce: https://trademarks.justia.com/865/88/trailhead-86588816.html https://trademarks.justia.com/865/88/trailhead-86588816.html
- apetresc 6y ago
  It's also just a generic term for a guidepost at the beginning of a journey – which is a perfect symbol for the product. I don't think there's any risk of confusion with a vendor-specific training portal.
  - tylertringas 6y ago
    +1. Let's hope
- tylertringas 6y ago
  Hmm, i had no idea. It's a derivative of our Founder Summit branding. Trailhead is the start of the path toward the summit. Also I like to hike. I think it's a generic enough term but we'll find out!
  - derision 6y ago
    Please don't give that up without a fight. Trademarking trailhead would be similar to trademarking "road" or "highway" or something like that, which would be ridiculous
    - tylertringas 6y ago
      all good. we can pivot to Goat Trail by Earnest Capital(TM)
pcmaffey 6y ago
One concern with this kind of model is the potential for it to become a honeypot for widespread data collection (eg. Startup School). Any thoughts yet on how to address that?
- tylertringas 6y ago
  Can you say more? We explicitly do ask, at the end of each section, if founders want to (optionally) send us the results to build up their profile/"application"... so there's some above board data collection happening. What's your main concern re: data collection with SS and/or trailhead?
  - pcmaffey 6y ago
    My concern is the moment when the question arises: "what else can we do with all this data co's are sending us" besides form a relationship with that co? At your scale, it's not much of an issue yet. But at larger scale, like SS or with what Social Cap's Capital-as-a-Service program was trying to do, founders are freely contributing their co's data to unknown investment algorithms, in exchange for ??. .ie a honeypot. That's not really different from how it is now (giving your data away to VCs). But rather than solving the asymmetry problems between founder / investor, my concern with any kind of VC platform model is that asymmetry will be magnified at scale. (All that said, I think Trailhead is a great approach to invert the standard process based on how things stand today.)
    - tylertringas 6y ago
      Ah yes, fair. I'm not sure there can be a true solution to "we have to see your data before know if we can invest or not" Our approach here is 1) we always give value before we ask for anything. Some strategy, resources, writing prompts, and anything else we can think of on a topic.. THEN we say "hey if you want to share your thinking on this here's how" 2) it's 100% optional. Founders can go through the entire process, get feedback from the community, hopefully improve their strategy, without ever sharing anything with us. But good points to consider and thanks.
- 6y ago
jkarneges 6y ago
Great to see innovation in the fundraising process. As a founder, the things that bother me the most about fundraising are: 1. The experience imbalance. VCs do pitch meetings every day for years on end. Founders, not so much. No wonder the expectations mismatch. 2. Wildly unpredictable outcomes. Early stage fundraising is more like working a fuzzy strategic partnership than applying for a loan. The same inputs probably don't produce the same outputs.
- tylertringas 6y ago
  Yea, for founders going down a traditional VC path, there is some what weird but actually sensible logic to the idea that "being good at pitching VCs" is actually a useful skill to filter for. If I'm a Seed VC, assessing how well the founder will do at raising from Series A-F investors is actually part of the game. We do "funding for bootstrappers" so most founders that work with us don't really plan on needing to raise more capital (it's not prohibited or anything, just not Plan A). So we and they don't really care about how "good" they are at playing the game of pitching.
  - jkarneges 6y ago
    > for founders going down a traditional VC path Has this been much of a choice? I figure most tech founders either get on the VC track or don't get to have a company. "Funding for bootstrappers" seems like a relatively new concept. Good to see another option!
    - tylertringas 6y ago
      I'd say the number of non-venture-backed software businesses exceeds venture-backed by at least 20:1. See also "patio11's law" https://twitter.com/mmcgrana/status/1260250538299408387?s=20 https://twitter.com/mmcgrana/status/1260250538299408387?s=20
      - jkarneges 6y ago
        Assuming that's true, it would be interesting to know what the alternative funding sources are, and whether they're appropriate or accessible to non-wealthy first timers building product companies. VC is ostensibly generally accessible. Even accelerators like YC are VC-track.
joekrill 6y ago
I hate when things pop up when I select text, because I have a tendency to randomly highlight text as I'm reading it. This little speaker pops up, so I clicked it out of curiosity, and it started to speak the text. The icon choice is a little unusual (I'd expect a play button or something, but that icon is typically used to control volume). But then I couldn't get it to stop playing. I even closed the tab and it was still playing. And for some reason Chrome doesn't show that tab as even playing audio so I could mute it. What the heck is going on there?
- tylertringas 6y ago
  hmm, will look into it. assume it's some default accessibility feature of our site theme
- ccheney 6y ago
  I tend to do the same, clicking, right-clicking, and highlighting text. Very likely using the Web Speech API[1]. I was able to reproduce your report of the audio not stopping when closing the tab so I dug a bit and found this open bug[2] in chromium. [1] https://developer.mozilla.org/en-US/docs/Web/API/Web_Speech_API https://developer.mozilla.org/en-US/docs/Web/API/Web_Speech_... [2] https://bugs.chromium.org/p/chromium/issues/detail?id=517317 https://bugs.chromium.org/p/chromium/issues/detail?id=517317
- cle 6y ago
  I hate when I click into an HN story's comments and the top comment is someone complaining about the site's design. (This is not a personal attack on you, and I'm not trying to downplay the poor design, just that...I come to HN to read about the content of the stories, not their design.)
koolhead17 6y ago
Love what folks at Earnest are doing. I was reading one of the draft LP documents, I am assuming it was shared here. Keep up good work, we need a different route/way of building business as well. :)
- tylertringas 6y ago
  thx! probably this one: https://earnestcapital.com/investment-memo-fund-2/ https://earnestcapital.com/investment-memo-fund-2/
  - koolhead17 6y ago
    Yes yes. This is the one. :)
embrassingstuff 6y ago
There is no such thing as bad capital. But looking at the web site, over approx 2 years, 15 investments, I presume low-6-figures. So out of 1000s online applications of "self builders" u have a 1 in 1000 acceptance rate? This statistic is just as important as being "founder friendly" or "no song and dance needed".
- tylertringas 6y ago
  i hear you. not enough. we're scaling up as fast as we can!
loceng 6y ago
I'm curious if any firms will be created where they're happy receiving 2-5x return after 5-10 years, the terms of these novel investment firms - arguably better than traditional VCs - are still trying to get extra icing from the cake and not just happy with the icing on their own slice. Re: https://earnestcapital.com/shared-earnings-agreement/ https://earnestcapital.com/shared-earnings-agreement/ "One reason for wanting to handle every possible outcome is that we are committed to a SEAL not having any control over the business: no equity, no shares, no board seat, no preferred voting rights." isn't congruent with "... there is a residual Equity Basis that remains after the Shared Earnings Cap is fully repaid" - I'm not sure if I'm misunderstanding or you're first saying there is in fact an equity-like function but in the conclusion claiming "no equity" taken? Also, anything regarding to the value of the mentors-investors that they claim will help out an investment (because they're incentivized) is all just ear candy and hype without evidence that they'll actually add any value or give useful direction for whatever business model(s) you implement. Maybe earn trust with founders before asking for or expecting extra icing?
- tylertringas 6y ago
  investors like me are at a basic level middlemen. We have to raise capital from other sources and then invest it in founders. So it's not so much a questions of what kind of returns we're 'happy' with as it is, what kind of returns will enable us to keep collecting more money that we can turn around and use to back founders. If I was already a billionaire deploying my own capital, it would be a different story (and I'm actually a big proponent of folks investing with lower return expectation because I think entrepreneurship is an inherent social good) but that's not our situation. > is all just ear candy and hype without evidence the only evidence i can think of would be reviews from other founders who've worked with us. They are a super nice bunch and are generally happy to have a chat if you're curious. Here's one founder quoting another on the non-cash benefits of working with us: https://twitter.com/_rchase_/status/1233074457406771208?s=20 https://twitter.com/_rchase_/status/1233074457406771208?s=20 >Maybe earn trust with founders before asking for or expecting extra icing? 100% Agreed.
  - loceng 6y ago
guptaneil 6y ago
Congrats on the launch! Both Trailhead and SEAL are very interesting ideas, and I really hope they take off (read: get copied by more investors ;) As an early stage bootstrapping founder, I'm curious to see how Trailhead works in practice. But regardless of whether or not it works, thanks for thinking like a founder and being willing to experiment. btw small typo: the link to 1 Second Everyday in your portfolio actually directs to yac.chat
- throwaway243711 6y ago
  The SEAL is basically debt with a super weird equity kicker that could completely ruin your cap table if you need to raise before paying any debt back, so hoping nobody copies it.
  - guptaneil 6y ago
    It reads like debt funding that turns into a SAFE if you decide bootstrapping isn't for you after all. That sounds reasonable to me, but the devil is in the details. As a founder, it's nice to have options though. Fundraising is a series of pros and cons. As we're seeing in this downturn, SAFE's aren't that safe either, but I'd still choose that over the hassle of a priced seed round. Ideally investors would provide multiple options, and one could choose the vehicle that aligns with your goals the best.
    - throwaway243711 6y ago
      Reads like, but isn’t anything like a SAFE. A SAFE converts at a discount (20%?), a convertible note converts including an interest rate (7% annually?), a SEAL converts at 3-5x investment amount.

162 points by sahillavingia 6y ago

hey folks, I'm the founder of Earnest Capital and love to hear questions or feedback. The gist here is I think the way we make founders pitch investors is pretty lame and we can do better. Definitely a v0.1 of our thinking here and would love suggestions for how to take it further.

EGreg 6y ago
Tyler, this is really innovative. The VC model needs rethinking, aligning more with founders, and along the lines of what you're doing here. Your mentor model works great also. As a founder of a company that has gotten to 8 MM users across 95+ countries, and $1M in revenues, and there is a lot more I can tell you in a private conversation. We've applied to VCs along the way, but the model is not always aligned with companies like ours, which make revenue from the beginning rather than hockey stick growth and zero revenues. One of the major reasons is that these kind of startups often need small amounts to get to the next level, but the due diligence of a VC sometimes costs more than that amount. If there was a "roadmap" model that VC would fund, say, $10K to get to the next level, then $20K, etc. and if it falls short, then they have to seek another such VC and syndicate. A bit like taking on lenders except it would be more along the lines of your Shared Earnings Agreement + Equity. Everything would be clearly spelled out, and rather than spending tons of time on due diligence, it would just be about a history of execution. PS: We filled out your "regular" application in early April, please check email from @qbix.com ... would love to talk next week. PPS: If you're a startup founder chime in and add your 2c, does your own experience in early stages resonate with what I've said? That if you were able to break down what you need to get to the next level, in $10K and $20K increments, with a second or third chance on slightly worse terms, you'd be happy to be funded in that manner, and work hard to make serious progress and document it.
- loceng 6y ago
  It's likely not worth the time investment to them for whatever return you'd be offering them for each $10k to $20k increments.
  - EGreg 6y ago
    Under the current model, that is correct. That’s like paying a UBI of $300 a month vs paying a whole department doing means testing for $100/month and then paying $300 a month of welfare to those who qualify. May as well do something more automated and send the money. Like what Tyler is doing here — collecting info over time. Make the entrepreneur spend most of the time providung the due diligence in the format you want. They have the time not the money — and it is reusable for other investors too. It should be a portal. Like the “Prizes, not Patents” debate. Same thing.
    - loceng 6y ago
      Another thought I had: they don't want to help you succeed in small increments because then you're 1) not likely to need their help any longer (they don't have you on a metaphorical leash), and 2) the more successful you are the more leverage you have in negotiating and could find other suitors to fund you at better rates.
      - EGreg 6y ago
        Well, I think there are different kinds of VCs. And anyway, as usual there is a way to address this... they can just get options (but not obligations) to have preferential rights in follow-on stuff, such as right of first refusal.
deleted 6y ago
[deleted]
zomglings 6y ago
I suggest you make "Early stage investing for bootstrappers" more prominent on the Trailhead announcement page. It wasn't clear to me what kind of companies you invested in and at which stage until I read HN comments and looked around your site a bit. I really like where you are going with this. Trailhead seems to be a formalization of the method that has worked best for my startup: keeping investors in the loop as to the development of our company, soliciting and then incorporating their (usually very valuable) feedback when we need it, and being transparent about where we are in terms of a raise. Really great idea, and I hope more investors follow in your footsteps.

burlesona 6y ago

This looks pretty cool. The experience of doing this sounds very similar to participating in YC Startup School. > You can leverage the Founder Summit forums for feedback from the Earnest team and our broader community of awesome founders and mentors (a free trial is included for everybody on Trailhead). I’m not familiar with the founder summit forums, but this sound sounds similar to the community aspect of Startup School. You mentioned that people get a free trial, but it sounds like someone can sign up for trailhead and stay in it for the long term without ever deciding to raise the earnest. What do you guys do in that case? When does someone get kicked out of their free trial? :)

tylertringas 6y ago
Thanks! Definitely pulling on the same thread as Startup School (though I've never done it myself). Some structural differences might be 1/ this explicitly designed to be a replacement for the application process at Earnest. Over time you build up a profile that contains most of what we need to make an investment decision. We'll still need to chat and do diligence, but we're trying to remove a lot of the uncertainty around what should be in a pitch and when to time the pitch. Basically pitching is not a skillset we optimize for at Earnest (since most of the founders we back not intend to raise continuously more rounds of capital). 2/ This is explicitly opinionated in structure. Everything will intentionally skew towards our "funding for bootstrappers" strategy vs being generic advice. This should help founders decide if they are a fit for working with us long-term. 3/ This is not a "how to build a business" process. It's much closer to "here is a bunch of questions and prompts that we have found valuable to strengthen founders' thinking and strategy + some resources"... we're not here to teach you how to build a business with this. > You mentioned that people get a free trial, but it sounds like someone can sign up for trailhead and stay in it for the long term without ever deciding to raise the earnest. What do you guys do in that case? When does someone get kicked out of their free trial? :) good question. this is subject to experiments/change but the way we're thinking about it now is 1) Founder Summit remains a paid community (we are still a small fund and this allows us to hire an awesome team + pay people for workshops, etc) 2) We want to avoid a "pay to pitch" scenario so Trailhead folks get a 3-month free trial. 3) At the end they can choose: don't apply to Earnest but stay in the community and pay, apply to Earnest (portfolio co's get free access), or decide they've gotten what they need and move on from both.

arvidkahl 6y ago

I really appreciate how this is an inversion of the "time-honored tradition" of making founders do loads of extra work within arbitrary deadlines in addition to growing their company. Too often, this is more a one-sided scramble (resembling an "audience with the king") than a mutually respectful conversation. It's really promising to see that you value the time of the founders you fund so much that you are ready to talk to them in a way that suits them, not just you. I like this.

tylertringas 6y ago
Thanks! The gate-keeping / "kiss the ring" approach to raising money has got to go.
- gumby 6y ago
  Investors need companies but often don’t act like it. I go to LP meetings from time to time and it’s fun to see the inversion.
  - tylertringas 6y ago
    Agreed. But also, the way raise money for Earnest is very similar to Trailhead: https://twitter.com/tylertringas/status/1260972763285774337?s=20 https://twitter.com/tylertringas/status/1260972763285774337?... Build a relationship and have a discussion over time is so much better for all parties vs "pitch me right now and I'll decide instantly"
  - scopendo 6y ago
    Reminds me of the way many landlords seem to treat their tenants.
    - edoceo 6y ago
      Tenants much easier to replace than finding a good company to invest in.

jrenshaw 6y ago

Looks interesting, but curious about the name. Trailhead is a fairly well known trademark of Salesforce: https://trademarks.justia.com/865/88/trailhead-86588816.html https://trademarks.justia.com/865/88/trailhead-86588816.html

apetresc 6y ago
It's also just a generic term for a guidepost at the beginning of a journey – which is a perfect symbol for the product. I don't think there's any risk of confusion with a vendor-specific training portal.
- tylertringas 6y ago
  +1. Let's hope
tylertringas 6y ago
Hmm, i had no idea. It's a derivative of our Founder Summit branding. Trailhead is the start of the path toward the summit. Also I like to hike. I think it's a generic enough term but we'll find out!
- derision 6y ago
  Please don't give that up without a fight. Trademarking trailhead would be similar to trademarking "road" or "highway" or something like that, which would be ridiculous
  - tylertringas 6y ago
    all good. we can pivot to Goat Trail by Earnest Capital(TM)

pcmaffey 6y ago

One concern with this kind of model is the potential for it to become a honeypot for widespread data collection (eg. Startup School). Any thoughts yet on how to address that?

tylertringas 6y ago
Can you say more? We explicitly do ask, at the end of each section, if founders want to (optionally) send us the results to build up their profile/"application"... so there's some above board data collection happening. What's your main concern re: data collection with SS and/or trailhead?
- pcmaffey 6y ago
  My concern is the moment when the question arises: "what else can we do with all this data co's are sending us" besides form a relationship with that co? At your scale, it's not much of an issue yet. But at larger scale, like SS or with what Social Cap's Capital-as-a-Service program was trying to do, founders are freely contributing their co's data to unknown investment algorithms, in exchange for ??. .ie a honeypot. That's not really different from how it is now (giving your data away to VCs). But rather than solving the asymmetry problems between founder / investor, my concern with any kind of VC platform model is that asymmetry will be magnified at scale. (All that said, I think Trailhead is a great approach to invert the standard process based on how things stand today.)
  - tylertringas 6y ago
    Ah yes, fair. I'm not sure there can be a true solution to "we have to see your data before know if we can invest or not" Our approach here is 1) we always give value before we ask for anything. Some strategy, resources, writing prompts, and anything else we can think of on a topic.. THEN we say "hey if you want to share your thinking on this here's how" 2) it's 100% optional. Founders can go through the entire process, get feedback from the community, hopefully improve their strategy, without ever sharing anything with us. But good points to consider and thanks.
6y ago

jkarneges 6y ago

Great to see innovation in the fundraising process. As a founder, the things that bother me the most about fundraising are: 1. The experience imbalance. VCs do pitch meetings every day for years on end. Founders, not so much. No wonder the expectations mismatch. 2. Wildly unpredictable outcomes. Early stage fundraising is more like working a fuzzy strategic partnership than applying for a loan. The same inputs probably don't produce the same outputs.

tylertringas 6y ago
Yea, for founders going down a traditional VC path, there is some what weird but actually sensible logic to the idea that "being good at pitching VCs" is actually a useful skill to filter for. If I'm a Seed VC, assessing how well the founder will do at raising from Series A-F investors is actually part of the game. We do "funding for bootstrappers" so most founders that work with us don't really plan on needing to raise more capital (it's not prohibited or anything, just not Plan A). So we and they don't really care about how "good" they are at playing the game of pitching.
- jkarneges 6y ago
  > for founders going down a traditional VC path Has this been much of a choice? I figure most tech founders either get on the VC track or don't get to have a company. "Funding for bootstrappers" seems like a relatively new concept. Good to see another option!
  - tylertringas 6y ago
    I'd say the number of non-venture-backed software businesses exceeds venture-backed by at least 20:1. See also "patio11's law" https://twitter.com/mmcgrana/status/1260250538299408387?s=20 https://twitter.com/mmcgrana/status/1260250538299408387?s=20
    - jkarneges 6y ago
      Assuming that's true, it would be interesting to know what the alternative funding sources are, and whether they're appropriate or accessible to non-wealthy first timers building product companies. VC is ostensibly generally accessible. Even accelerators like YC are VC-track.

joekrill 6y ago

I hate when things pop up when I select text, because I have a tendency to randomly highlight text as I'm reading it. This little speaker pops up, so I clicked it out of curiosity, and it started to speak the text. The icon choice is a little unusual (I'd expect a play button or something, but that icon is typically used to control volume). But then I couldn't get it to stop playing. I even closed the tab and it was still playing. And for some reason Chrome doesn't show that tab as even playing audio so I could mute it. What the heck is going on there?

tylertringas 6y ago
hmm, will look into it. assume it's some default accessibility feature of our site theme
ccheney 6y ago
I tend to do the same, clicking, right-clicking, and highlighting text. Very likely using the Web Speech API[1]. I was able to reproduce your report of the audio not stopping when closing the tab so I dug a bit and found this open bug[2] in chromium. [1] https://developer.mozilla.org/en-US/docs/Web/API/Web_Speech_API https://developer.mozilla.org/en-US/docs/Web/API/Web_Speech_... [2] https://bugs.chromium.org/p/chromium/issues/detail?id=517317 https://bugs.chromium.org/p/chromium/issues/detail?id=517317
cle 6y ago
I hate when I click into an HN story's comments and the top comment is someone complaining about the site's design. (This is not a personal attack on you, and I'm not trying to downplay the poor design, just that...I come to HN to read about the content of the stories, not their design.)

koolhead17 6y ago

Love what folks at Earnest are doing. I was reading one of the draft LP documents, I am assuming it was shared here. Keep up good work, we need a different route/way of building business as well. :)

tylertringas 6y ago
thx! probably this one: https://earnestcapital.com/investment-memo-fund-2/ https://earnestcapital.com/investment-memo-fund-2/
- koolhead17 6y ago
  Yes yes. This is the one. :)

embrassingstuff 6y ago

There is no such thing as bad capital. But looking at the web site, over approx 2 years, 15 investments, I presume low-6-figures. So out of 1000s online applications of "self builders" u have a 1 in 1000 acceptance rate? This statistic is just as important as being "founder friendly" or "no song and dance needed".

tylertringas 6y ago
i hear you. not enough. we're scaling up as fast as we can!

loceng 6y ago

I'm curious if any firms will be created where they're happy receiving 2-5x return after 5-10 years, the terms of these novel investment firms - arguably better than traditional VCs - are still trying to get extra icing from the cake and not just happy with the icing on their own slice. Re: https://earnestcapital.com/shared-earnings-agreement/ https://earnestcapital.com/shared-earnings-agreement/ "One reason for wanting to handle every possible outcome is that we are committed to a SEAL not having any control over the business: no equity, no shares, no board seat, no preferred voting rights." isn't congruent with "... there is a residual Equity Basis that remains after the Shared Earnings Cap is fully repaid" - I'm not sure if I'm misunderstanding or you're first saying there is in fact an equity-like function but in the conclusion claiming "no equity" taken? Also, anything regarding to the value of the mentors-investors that they claim will help out an investment (because they're incentivized) is all just ear candy and hype without evidence that they'll actually add any value or give useful direction for whatever business model(s) you implement. Maybe earn trust with founders before asking for or expecting extra icing?

tylertringas 6y ago
investors like me are at a basic level middlemen. We have to raise capital from other sources and then invest it in founders. So it's not so much a questions of what kind of returns we're 'happy' with as it is, what kind of returns will enable us to keep collecting more money that we can turn around and use to back founders. If I was already a billionaire deploying my own capital, it would be a different story (and I'm actually a big proponent of folks investing with lower return expectation because I think entrepreneurship is an inherent social good) but that's not our situation. > is all just ear candy and hype without evidence the only evidence i can think of would be reviews from other founders who've worked with us. They are a super nice bunch and are generally happy to have a chat if you're curious. Here's one founder quoting another on the non-cash benefits of working with us: https://twitter.com/_rchase_/status/1233074457406771208?s=20 https://twitter.com/_rchase_/status/1233074457406771208?s=20 >Maybe earn trust with founders before asking for or expecting extra icing? 100% Agreed.
- loceng 6y ago

guptaneil 6y ago

Congrats on the launch! Both Trailhead and SEAL are very interesting ideas, and I really hope they take off (read: get copied by more investors ;) As an early stage bootstrapping founder, I'm curious to see how Trailhead works in practice. But regardless of whether or not it works, thanks for thinking like a founder and being willing to experiment. btw small typo: the link to 1 Second Everyday in your portfolio actually directs to yac.chat

throwaway243711 6y ago
The SEAL is basically debt with a super weird equity kicker that could completely ruin your cap table if you need to raise before paying any debt back, so hoping nobody copies it.
- guptaneil 6y ago
  It reads like debt funding that turns into a SAFE if you decide bootstrapping isn't for you after all. That sounds reasonable to me, but the devil is in the details. As a founder, it's nice to have options though. Fundraising is a series of pros and cons. As we're seeing in this downturn, SAFE's aren't that safe either, but I'd still choose that over the hassle of a priced seed round. Ideally investors would provide multiple options, and one could choose the vehicle that aligns with your goals the best.
  - throwaway243711 6y ago
    Reads like, but isn’t anything like a SAFE. A SAFE converts at a discount (20%?), a convertible note converts including an interest rate (7% annually?), a SEAL converts at 3-5x investment amount.