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I run an exponentially growing fully automated business that is limited by my available operating capital. If VCs are useless (or finding a good one is a lotter

by bitL 11y ago

I run an exponentially growing fully automated business that is limited by my available operating capital. If VCs are useless (or finding a good one is a lottery), what are the other reasonable ways to raise capital (that don't eat all the profits nor want to control everything)? I would prefer Vinod's brutal honesty to fake politeness any time.

danieltillett 11y ago
Talk to a non-VC person with money to invest and who has shown that they are willing to take a risk. If what you have is real I am happy to talk to you about your business and if things stack up put my money where my mouth is.
bmh100 11y ago
Assuming that your question is not rhetorical, there are multiple ways to address this cash flow problem. You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, taking out loans against your receivables, asking vendors to finance your spending, converting a portion of employee compensation to a profit share that is payed out on a later date, finding strategic partners to provide financing or resources, etc. I hope this is helpful. There are many possibilities, but none are necessarily better than selling equity.
- copsarebastards 11y ago
  > You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, It's worth adding that these in particular are good business practices with or without VCs, because: 1. It demonstrates that people will pay for your product. Nothing is worse than spending money making something only to discover nobody will pay for it. 2. It's aware of the 80/20 rule. Up-front payment does a good job of limiting you to the 20% of your client base who will make you 80% of your money. The clients who want things most on their terms, who will nickel-and-dime you, make unreasonable demands, and review you poorly to other clients, are going to balk at an up-front payment and go elsewhere, and that's a good thing. You don't need them. They'll weigh down your competitors and leave you more efficient.
charlesdm 11y ago
Wealthy entrepreneurs or entrepreneurial/investor families (think family offices) can be good, if you want to raise third party capital. They usually take a longer term vision than a VC would, since they're basically one of the groups of people VCs raise from. I'd prefer working with those over a VC any day of the week if possible. They're usually bring a lot more value to the table.
- AndrewKemendo 11y ago
  Aren't you just describing Angels?
  - charlesdm 11y ago
    Well, maybe. I guess it depends on how you look at it. There are angels who spread their risk significantly and invest in a ton of startups (think, Ron Conway). Then there are wealthy individuals/families (e.g. Bill Gates, or the Walton family) who have less formal investing guidelines but occasionally back good entrepreneurs. This could be through seed capital, growth capital, or capital for a private equity style leveraged buyout. Raising capital this way is much more about relationships than the VC game is. It's a lot less formal. These people usually want to (help you) build sustainable companies, nit you're not really competing against a ton of other people/deals (like you are with VC firms). Even if someone came to them with a decent idea, they probably wouldn't back them.
s73v3r 11y ago
Banks are still giving small business loans.

by bitL 11y ago

danieltillett 11y ago

Talk to a non-VC person with money to invest and who has shown that they are willing to take a risk. If what you have is real I am happy to talk to you about your business and if things stack up put my money where my mouth is.

bmh100 11y ago

Assuming that your question is not rhetorical, there are multiple ways to address this cash flow problem. You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, taking out loans against your receivables, asking vendors to finance your spending, converting a portion of employee compensation to a profit share that is payed out on a later date, finding strategic partners to provide financing or resources, etc. I hope this is helpful. There are many possibilities, but none are necessarily better than selling equity.

copsarebastards 11y ago
> You can focus on collecting revenue faster, offering new customers less generous payment terms, demanding payment up front or in advance, It's worth adding that these in particular are good business practices with or without VCs, because: 1. It demonstrates that people will pay for your product. Nothing is worse than spending money making something only to discover nobody will pay for it. 2. It's aware of the 80/20 rule. Up-front payment does a good job of limiting you to the 20% of your client base who will make you 80% of your money. The clients who want things most on their terms, who will nickel-and-dime you, make unreasonable demands, and review you poorly to other clients, are going to balk at an up-front payment and go elsewhere, and that's a good thing. You don't need them. They'll weigh down your competitors and leave you more efficient.

charlesdm 11y ago

Wealthy entrepreneurs or entrepreneurial/investor families (think family offices) can be good, if you want to raise third party capital. They usually take a longer term vision than a VC would, since they're basically one of the groups of people VCs raise from. I'd prefer working with those over a VC any day of the week if possible. They're usually bring a lot more value to the table.

AndrewKemendo 11y ago
Aren't you just describing Angels?
- charlesdm 11y ago
  Well, maybe. I guess it depends on how you look at it. There are angels who spread their risk significantly and invest in a ton of startups (think, Ron Conway). Then there are wealthy individuals/families (e.g. Bill Gates, or the Walton family) who have less formal investing guidelines but occasionally back good entrepreneurs. This could be through seed capital, growth capital, or capital for a private equity style leveraged buyout. Raising capital this way is much more about relationships than the VC game is. It's a lot less formal. These people usually want to (help you) build sustainable companies, nit you're not really competing against a ton of other people/deals (like you are with VC firms). Even if someone came to them with a decent idea, they probably wouldn't back them.

s73v3r 11y ago

Banks are still giving small business loans.