January 4, 2018 Dave Hersh via Medium : Why Buying a Stalled Startup is Better than Starting From Scratch (Now)

After several years, I learned that the companies are out there, but the stars have to align to make a deal work. Ideally…

1. You have a personal connection to the business, including founders and investors.
2. The board is ready for a move like this.
3. The core R&D team is excited about this move.
4. You know and love the category.
5. The business stalled due to go-to-market failure, not lack of demand.
6. It’s not a competitive M&A process.
7. You can move quickly.
8. You’re ready to roll up your sleeves and run the business.

CATEGORY: alternative financing, leadership, profitability

November 10, 2017 Bryce Roberts via Medium : How We Think About Returns

About 5yrs ago the team at Basecamp (fka 37Signals) stopped editorial work on a section of their site they called Bootstrapped, Profitable and Proud (BPP). The stated purpose of the site was to “profiles companies that have over one million dollars in revenues, didn’t take VC, and are profitable”.  Today, many view profitability as limiting or the acknowledgement that a founder has lost interest in hyper growth and has been lulled into the ease of running a mere “lifestyle business”. (read more…)

CATEGORY: alternative financing, profitability, resilience

April 30, 2017 Tom Tunguz : A Spike of Venture Debt in Startups

Venture debt is an attractive way of financing a company’s operations because it’s less expensive and less dilutive than an equity round. As the amount of equity investing in Series As and Bs has exploded, venture borrowing has followed, and a new market has blossomed at the very latest stages. (read more…)

CATEGORY: alternative financing, debt, growth

April 24, 2017 Clement Vouillon via Medium : The Rise of Non “VC compatible” SaaS Companies

If their aim is to build fast growing companies with the help of VCs then it makes sense to work together. But if they prefer to do so by financing their business purely thanks to the revenue they manage to generate from their customers it’s fantastic too. There’s no “evil” or “angel” here, these are just two different approaches to building a business and everyone (founders as well as VCs) should chose its path wisely. (read more…)

CATEGORY: alternative financing, debt

December 22, 2016 Bryce Roberts via Medium : Meaningful Exits For Founders

Lifetimes of work and risk lie between a Seed round and a Series D round. And, despite increasing the value of the underlying business 7x, the dollars at exit for the founder remain roughly the same. It is also worth noting that an exit at $210M would not even qualify as a home run for even the smallest fund in Sam’s examples. (read more…)

CATEGORY: alternative financing, capital, profitability

September 16, 2016 Eric Paley via Tech Crunch : Venture capital is a hell of a drug

I regularly see entrepreneurs agonize over a percent of dilution, while ignoring the fact that they are surrendering their most likely exit options for a low-probability shot at building a superstar startup. Billions of dollars have been outright wasted by founders selling future value that didn’t materialize, while surrendering present value that could have been navigated to great success. My advice: Don’t give up your present for a future you haven’t validated. (read more…)

CATEGORY: alternative financing, leadership, VC

August 11, 2016 Wall Street Journal : In Tough Climate, New Investors Scoop Up Startups and Revamp for Sale

After trying for four years and not generating enough growth, Walter Chen decided to sell his work productivity startup, iDoneThis.  The Las Vegas company couldn’t raise new funding or find a suitable strategic buyer after initially raising $900,000 in seed funding.  So in November Mr. Chen and his co-founder sold to an unconventional hybrid venture capital-private equity investor (read more…)

CATEGORY: alternative financing, capital, downturn