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Ask YC/Startups: How has fundraising been going for you?
We've all ready the gazillion posts spelling out the doom and gloom for startups (and a few optimistic ones). Just wondering how other entrepreneurs on HN have found the fundraising environment in practice.
We're just about done with our seed round and its been really great. We started about a month ago, and have 75% of our round completed (still a couple slots open!). This includes both institutional and friends/family investors. If anything, I've found investors more willing to give a startup investment a try than risk losing more in the financial markets.
I've also found the deck works wonders. Not a single investor asked for an old-school biz plan, and only one asked for actual cash-flow projections. Most investors seem to have a team-focused thesis, even in these times. Finally, all of them said they wouldn't touch an investment that's solely ad-driven, even if they would have 1-2 years ago. So diversified biz model with good team still seems to be OK when fundraising.
How about others?
- ram1024 18y agoi'm rather disturbed with the comment about "not touching an investment that's solely ad-driven" do they not understand that the internet has the eyeballs of more people in the world than any other medium ever? you might as well swear off advertising completely if you don't believe in the power of advertising on the internet. sure "Banner ads" don't give us much to be confident about, but that doesn't mean that we're not going to innovate our way out of this slump and do it right soon. who are these people? i need to give them a stern talking to...
- run4yourlives 18y agoAdvertising is the first expense most companies cut during a downturn, so it may be more of a "this point in time" stance than anything else.
- ram1024 18y agoi see where that is the case. i just hope it's not idle paranoia at this point letting people's judgements be clouded. if they have a solid reason, that's fine. but if they're just being sheeple they need to be educated properly. advertising is practically the ONLY way to gain traction in a recession. what needs to be cut is NON revenue generating expenses in companies. not the ones that actually drive your business
- jacobscott 18y agoWhy is advertising the only way to gain traction in a recession? Do you not understand that the startups on the Internet have many options for revenue? Do you need a stern talking to? (above is tounge-in-cheek if that wasn't clear)
- ram1024 18y agoplease do. i always welcome criticism. it builds character :D
- run4yourlives 18y agoadvertising is practically the ONLY way to gain traction in a recession. That's simply un-true. Advertising is a growth strategy, but you can only grow when you're sure you've got all your ducks in order. What often happens during a recession is that the people in charge cut back on growth areas to ensure they are still focused on the right things. If they find that they are not, they persue new directions, if they confirm that they are going in the right directions, they reinvest. You can rant about it all you want, but that is the reality of the marketplace. Not reacting to reality is not a smart thing to do, and most smart investors would rather keep their cash then give it to a (now riskier) venture.
- ram1024 18y agoprecisely what i meant by "gaining traction". of course it's a growth strategy. i would never suggest otherwise. but this IS the technology age. and i would even go out on a limb to suggest, if you're not growing and/or innovating, you're dying. and that's doubly true when financial systems collapse
- run4yourlives 18y agoif you're not growing and/or innovating, you're dying. If you are traveling without focus on your direction, you will eventually fall off a cliff. People start really worrying about their eventual cliff drops (real or imagined) during a recession. All businesses will need to react to that perception change if they want to survive.
- shafqat 18y agoI don't think they are swearing off advertising completely - as the commenter above says, its more a result of the economic environment. Of course, innovation in the ad space, especially to replace old-school banner ads would be a huge opportunity.
- ram1024 18y agoyes, you can imagine worldwide frustration over poor monetization of these "internet eyeballs" is reaching a boiling point. i am VERY surprised the solution isn't here yet
- wensing 18y agoi am VERY surprised the solution isn't here yet Not to go all DHH on you, but you could create content people are willing to pay for.
- helveticaman 18y ago>but you could create content people are willing to pay for. I'm sure he/she can try, but not sure / could achieve this goal. Out of the thousands of web/online services, I only pay money to 4: 1password, paypal, skype, and itunes. While in theory one could get at least one dude to pay for a service, I doubt a randomly selected poster on Hacker News can get enough cash this way to buy a taco on a regular basis (i.e. often enough to survive on the calories). At least in the current situation.
- wensing 18y agodo they not understand that the internet has the eyeballs of more people in the world than any other medium ever? Fun fact: There are not enough eyeballs in the world to support the CPM goals of the newspaper industry.
- helveticaman 18y agoIt's not the amount of eyeballs, it's the amount of money these eyeballs represent. So far, that amount is too low.
- arockwell 18y agoI think part of the problem is how many sites can you name that make money solely off ads? Google certainly does and I think MySpace is barely profitable. However, facebook is still not (according to wikipedia), and neither youtube or digg are profitable either.
- wschroter 18y agoI'm just not seeing the ad dollars add up. I know of sites doing millions of uniques per month that can barely earn enough in Adsense (not the best model) to pay the cost of servers and rent. At all of the sites that I've run (Go BIG Network, Swapalease.com, GotCast.com, etc.) the ad revenues are always an afterthought. If we had to survive on those $$ alone we would be screwed.
- NoBSWebDesign 18y agoI didn't think it'd be possible to have this many responses to a question where not a single one even attempts to answer the question :-) We've had some interest from a few investors (which is somewhat difficult being a web-based company in the Midwest), but we are still unsure about actually accepting any investment, since we are on the verge of profitability having so far been boot-strapped.
- shafqat 18y agoHaha,thanks for getting it back on track! What company? Couldn't see anything on your profile.
- NoBSWebDesign 18y agoNo prob. Sorry I couldn't be more help with the investor question. Our company is RateMyStudentRental.com.