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Ask PG: The right reason to take investor money
In your "Ramen Profitable" essay you wrote:
Ramen profitable means no more than the definition implies. It does not, for example, imply that you're "bootstrapping" the startup—that you're never going to take money from investors. Empirically that doesn't seem to work very well. Few startups succeed without taking investment.
So the question becomes--when is the right time, and what are the right reasons, to take invesment? In what situation is taking investment optimizing for success (for a web startup in particular)?
- pg 17y agoIf you're doing a true startup (meaning a company designed to grow fast, not a consulting company or a niche product company), it's usually a good idea to take investor money. The most basic reason is that it lets you grow faster. Some investors also supply expertise and connections you couldn't buy. Some times tend to be better to raise money than others. You might not want to raise money when (a) you're in the middle of a big project, or (b) you can't get decent terms.
- noodle 17y agowhere do you draw the line on niche companies in the definition of a "true startup"? seems like YC has invested in quite a few niche-specific companies. just curious, don't mean to threadjack too badly or nitpick.
- pg 17y agoMarket size, basically. A company making software for, say, cataloguing butterfly collections wouldn't be a startup.