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Thanks for sharing the reality instead of writing articles like "How I started X and made Y in Z days". This is really painful to read. This is one reason why

by neya 14y ago

Thanks for sharing the reality instead of writing articles like "How I started X and made Y in Z days". This is really painful to read. This is one reason why I will never take money from an external investor. There are some scenarios when you definitely need an investor's help. But right now, the trend is almost like "it's a cool factor to seek investment for your startup". The problem with taking money from someone else is that, you become obligated/answerable to them. Remember, we all start-up because we don't want to go down the traditional working-for-a-corporate route, because we don't want to be answerable/obey no one/their orders. But seeking investment (in most cases) just defeats this purpose of starting up. Why the hell would someone want to be answerable to a third party for running YOUR company in YOUR way?? And what happens when that company fails? You need to either apologize/console the investor that you will somehow get back his money. Contrast this with having no investors at all, worst case scenario would be you lost all your money. But that's much better than losing someone else's. I find nothing wrong in trying to build an Saas that generates $10000-$50000 a month in revenue from day one, without external investment, instead of seeking millions in investment for a bunch of photo filters on a phone only to later worry about monetizing the idea.

oroup 14y ago
> This is one reason why I will never take money from an external investor. You could use the same logic to convince yourself never to convince anyone to quit their job and come work with you. Or to move their family across the country. Or to convince their boss that using your startup as a vendor rather than SAP is the right thing to do. Making something work is going to require convincing others to bet on you - with money, with time and with credibility. Betting involves risk. It's unavoidable. But doing it "on your own" is largely a fiction.
ericabiz 14y ago
> "The problem with taking money from someone else is that, you become obligated/answerable to them." Could not disagree more. I co-founded and am the CEO of a funded company. Investors (at least professional ones, which, if you have a good company, you can vet them as much or more as they vet you to make sure they are professional!) will encourage you, meet with you, and even help you work through problems and issues. But by no means are you obligated to do anything that they say. In fact, most would prefer that if you have market data that disagrees with them, you go with what the market says--after all, you are the expert in this space, not they... > "And what happens when that company fails? You need to either apologize/console the investor that you will somehow get back his money." No, on typical seed round investments (and even Series A and above), you do not owe the investors back their money. There's not even a moral obligation to pay them back--they understand the risks, and as others have stated above in the comments, if this loss was going to make them destitute, they should absolutely not ever have been investing in your round. (Which is why you should be doing the due diligence on them as much or more as they were on you, before they invested.) Getting investors and pitching, etc. was really scary for me. But once I found the right people, I realized how awesome it was. They have a (small) financial interest in me, so I can ask them honest questions and get answers from their perspective. It is a blessing and it has helped me run my company better than I ever would have without investors.

by neya 14y ago

oroup 14y ago

> This is one reason why I will never take money from an external investor. You could use the same logic to convince yourself never to convince anyone to quit their job and come work with you. Or to move their family across the country. Or to convince their boss that using your startup as a vendor rather than SAP is the right thing to do. Making something work is going to require convincing others to bet on you - with money, with time and with credibility. Betting involves risk. It's unavoidable. But doing it "on your own" is largely a fiction.

ericabiz 14y ago

> "The problem with taking money from someone else is that, you become obligated/answerable to them." Could not disagree more. I co-founded and am the CEO of a funded company. Investors (at least professional ones, which, if you have a good company, you can vet them as much or more as they vet you to make sure they are professional!) will encourage you, meet with you, and even help you work through problems and issues. But by no means are you obligated to do anything that they say. In fact, most would prefer that if you have market data that disagrees with them, you go with what the market says--after all, you are the expert in this space, not they... > "And what happens when that company fails? You need to either apologize/console the investor that you will somehow get back his money." No, on typical seed round investments (and even Series A and above), you do not owe the investors back their money. There's not even a moral obligation to pay them back--they understand the risks, and as others have stated above in the comments, if this loss was going to make them destitute, they should absolutely not ever have been investing in your round. (Which is why you should be doing the due diligence on them as much or more as they were on you, before they invested.) Getting investors and pitching, etc. was really scary for me. But once I found the right people, I realized how awesome it was. They have a (small) financial interest in me, so I can ask them honest questions and get answers from their perspective. It is a blessing and it has helped me run my company better than I ever would have without investors.