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[edit: seems they're not doing revenue based financing.] "Nowhere in anything we’ve written publicly or discussed privately about indie.vc have we said we’re o
by solve 12y ago
[edit: seems they're not doing revenue based financing.]
"Nowhere in anything we’ve written publicly or discussed privately about indie.vc have we said we’re only interested in modest, cashflow businesses."
If they're not aiming for modest wins, then why wouldn't the startups be reinvesting as much revenue as possible back into further growth, instead of using it to immediately repay this loan? Eating up 80% of revenues to repay the loan sounds like a major damper to being able to reinvest toward further growth at those early stages.
And 100% revenue financing, instead of some kind of equity / revenue funding hybrid? Sounds like a recipe for all kinds of misaligned incentives.
- bryc3 12y agoThere is no timeframe on repayment of the loan. If founders want to keep reinvesting in the business that is fantastic. If they want to start taking more out for themselves, that's when the distributions kick in. We hope that helps keep our incentives aligned.
- loceng 12y agoI think a misconception I am seeing people have, please correct me if I'm wrong, is with the understanding of distributions. You could re-invest 100% of what isn't going to founder salaries into the business, however if $100k is going towards founders then they receive $20k and Indie.vc receives $80k. Is that correct?
- solve 12y agoI see, thank you for clarifying. Somehow, I think the word "cash flow" gave me the impression that this was based on revenues, not distributions. Can you clarify what distributions means? So if the founders pay themselves a salary, that counts as distributions?
- glenngillen 12y agoOnly if the founder salary has increased by more than 50% since the start. See this response from Bryce with more detail: https://news.ycombinator.com/item?id=9139507 https://news.ycombinator.com/item?id=9139507