January 21, 2020 TIMIA Capital : As Over-Funded Unicorns Lose Their Shine, Is Bootstrapping Finally Becoming Newsworthy?

The phenomenon of celebrating funding rounds is baffling. And it sets a poor example for new founders. We need to take the focus off the funding and place it back on enterprise value creation, revenue growth, and capital efficiency. I’m not saying that you should never take venture capital. It’s just that there’s a time and a place for it and, for the most part, early-stage founders are hugely disadvantaged by it. For early-stage founders, it’s in the best interest of the venture capitalist if you rapidly fail. Compounding returns make time your enemy—when you fail to meet the unrealistic growth targets, the VC will cash out and move on to the next shiny object. In this scenario, the founder is left with nothing and all the enterprise value creation (or potential for value creation) is destroyed. (read more…)

CATEGORY: alternative financing, capital, debt, profitability

January 9, 2020 Wall Street Journal : Money-Losing Companies Mushroom Even as Stocks Hit New Highs

The combination of forces has pushed the percentage of listed companies in the U.S. losing money over 12 months to close to 40%, its highest level since the late 1990s outside of postrecession periods. This time there’s no recession, and stock market indexes are at or near record highs. That sounds scary, although it’s mainly worrying for investors in smaller companies. (read more…)

CATEGORY: downturn, profitability, risk, valuation

December 6, 2019 SaaS Capital : SaaS Industry 2019 Observations and Thoughts for 2020

We continue to believe that the economy and capital markets will tighten over the next several years. However, there is now a large pool of committed PE dollars to support the stronger SaaS companies through a downturn. Related, we have recently seen more support for profitability, or at least more controlled losses, among the VC and startup communities that have previously decreed growth at all costs. (read more…)

CATEGORY: alternative financing, profitability, SaaS

October 16, 2018 Brendan Burns via Forbes : A Faster Path To Success: Alternatives To The Traditional Startup/VC Route

I have been an early-stage tech guy my whole career since graduating from Columbia Business School during height of the dotcom boom. At heart, I am little bit of a contrarian and very much a value investor. For that reason, I was looking for a shortcut when starting my last company—I think I found one, and it’s one you can use, too. (read more…)

CATEGORY: bootstrap, leadership, profitability, resilience

February 5, 2018 Dave Hersh via Medium : Can This Company Be Turned Around?

There are no shortage of companies in need of wholesale transformation, where the strategy or execution didn’t work and they are stuck between capital needs and market realities. (read more…)

CATEGORY: leadership, profitability, resilience

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

June 1, 2017 Bryce Roberts via Medium : Real Businesses

I assure you there are founders out raising money right now in the hopes of building a business so they can flip it, make millions, and fund their own comfortable “post financial” lifestyle. Of course, they would never frame it that way; so let’s be clear, if your pitch deck has an “exit strategy” slide you are pitching a lifestyle business. (read more…)

CATEGORY: bootstrap, product-market fit, profitability, resilience

January 16, 2017 Sramana Mitra : Death By Overfunding

Funding = Success, right? I wish it did. But entrepreneurial tracks are littered with carcasses of dead startups that were very well funded, some to the tune of hundreds of millions (read more…)

CATEGORY: leadership, profitability, VC

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