Re:The Hacker's Guide to Investors
by boris on Monday April 30, 2007 @11:39AM
(#18137)
I remember a few years ago Paul was proclaiming that as the cost of starting a company keeps going down, VCs will become extinct. It is interesting to see how the perspective is changing. Now Paul says you need investors to gain advantage over competition even though, oftentimes, a startup needs very little to make a product that people want.
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I can't tell why point 22 shouldn't be titled "Sometimes you need capital other than sweat equity". It's not clear to me why this couldn't come in the form of debt. The only type of debt I recall Paul mentioning is the convertible kind.
I mean, other than the fact you'd have to talk someone into giving you that loan at a reasonable interest rate. Talking investors into giving you the money as a bet for an astronomical interest rate would be easier for companies with no collateral. Still, if you have a revenue stream and can show how a capital expenditure would increase it, it would at least be worth considering.
Even more interesting is that he reiterates the advantage of having investors in this essay, which also acknowledges the huge time-cost of funding. This implies that the benefits are worth this high cost. One could disappoint customers or fall behind competitors while engaged full-time in funding.
VCs are not identical with investors.