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Bootstrapping a Software Company - down-to-earth common sense from 10 years ago.
- ekanes 19y agoSome interesting ideas in there but the table showing ownership is a bit misleading. It compares owning 85% of a $10 million dollar company (bootstrapping) to owning just 15% of a similar $10 million dollar company (outside investment). Nowhere does it acknowledge the value of the investment - in this table it's as if the investor hands the entrepreneur a wad of cash, the entrepreneur lights the cash on fire, and when it's all burnt out they draw up the table. :P
- joeguilmette 19y agoyea, and i'm by no means an expert, but is it commonplace to see VCs owning 70% of a company?
- ekanes 19y agoI'm no expert either, but from what I've read by the end of multiple rounds, they could own that much. Right out of the gate a 20% or 30% is more common. As a company comes back for more rounds of funding, the founders get diluted. The VCs often have anti-dilution provisions in there to protect against this - something to watch for.
- gruseom 19y agoI'm surprised this article didn't receive more attention here. Its author could hardly be more qualified to speak on the topic of software startups: he built a multi-million-dollar software product not once, but twice. I found the article to be densely packed with insights, as if he were trying to dump everything he'd learned in one session. I intend to return to it and try to absorb more.