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Hi there - my name is Matt Althauser and I’m a partner/founder at Polychrome. The funding that we brought to the company was $250,000 which we valued as the equ

Hi there - my name is Matt Althauser and I’m a partner/founder at Polychrome. The funding that we brought to the company was $250,000 which we valued as the equivalent of the value of 3 years of development that the existing team had invested into building the initial open source project. For us (polychrome) at the time, the money came directly from the bank accounts of myself and my two co-founders. It was pretty scary for us all! In that sense; we do think of ourselves as bootstrapped. We (polychrome) did not (and still have not) take a dollar in compensation for the business. We’ve worked directly on the business for 3 years with the founders. I have been selling the software in Europe and my partner, Greg, in the US/Asia until we got revenue high enough to hire our head of sales, Mike and head of marketing, Anna. While doing this, we (Polychrome) paid ourselves by doing consulting for venture baked companies. Ben (Flagsmith CEO) was being paid by the business and his existing agency. This is definitely not venture. FWIW - I have built two venture backed companies - Optimizely & Amplitude which took typical venture rounds and would not be bootstrapped IMO.

malthauser 3y ago
For extra clarity, the $250k + sweat equity made us 50/50 partners. Again - not an Angel or venture structure.
- gizmo 3y ago
  This is how your partner describes your PE firm in a podcast interview: > Polychrome is a PE firm focused on acquiring 50% or greater equity positions in B2B software companies. That’s our primary focus and that’s what we do pretty much every day. [...] So we are open to full buyouts, we’re open to partial buyouts. Our core structure though, is typically keeping the founder in place. And we are typically partnering with technical founders who don’t have, the go-to-market expertise or who just don’t want to sell or the go-to-market is what’s keeping the company from taking that next step in their growth trajectory. And so what we’ve done and what our typical structure is we’ll do cash, let’s say for 25% of the business. When you talk about "typically keeping the founder in place" you're not 50/50 partners. You're the senior partner. https://blog.acquire.com/startup-acquisition-episode-26/ https://blog.acquire.com/startup-acquisition-episode-26/
gizmo 3y ago
Thanks for clarifying. Many people (including other commenters) wonder how people manage to transition from open source project to a profitable company. I think the blogpost would have been much better with this extra background information. Normally, when people read stories about bootstrapping they assume the original founder(s) retain all the equity, but in this case Ben had to sell a 50% stake in his business in order to survive.
j4yav 3y ago
Wow that's impressive! Though I always thought bootstrapped was more that the product pays for itself from an early phase, not that you use debt/investment to fund a big make or break effort that's going to need a show lot of revenue fast.

malthauser 3y ago

For extra clarity, the $250k + sweat equity made us 50/50 partners. Again - not an Angel or venture structure.

gizmo 3y ago
This is how your partner describes your PE firm in a podcast interview: > Polychrome is a PE firm focused on acquiring 50% or greater equity positions in B2B software companies. That’s our primary focus and that’s what we do pretty much every day. [...] So we are open to full buyouts, we’re open to partial buyouts. Our core structure though, is typically keeping the founder in place. And we are typically partnering with technical founders who don’t have, the go-to-market expertise or who just don’t want to sell or the go-to-market is what’s keeping the company from taking that next step in their growth trajectory. And so what we’ve done and what our typical structure is we’ll do cash, let’s say for 25% of the business. When you talk about "typically keeping the founder in place" you're not 50/50 partners. You're the senior partner. https://blog.acquire.com/startup-acquisition-episode-26/ https://blog.acquire.com/startup-acquisition-episode-26/

gizmo 3y ago

Thanks for clarifying. Many people (including other commenters) wonder how people manage to transition from open source project to a profitable company. I think the blogpost would have been much better with this extra background information. Normally, when people read stories about bootstrapping they assume the original founder(s) retain all the equity, but in this case Ben had to sell a 50% stake in his business in order to survive.

j4yav 3y ago

Wow that's impressive! Though I always thought bootstrapped was more that the product pays for itself from an early phase, not that you use debt/investment to fund a big make or break effort that's going to need a show lot of revenue fast.