As far as winning out vs competitors, efficiency can be key. There is no question there.
One of the things about frontier tech (autonomous, AR, sensor networks, ML) is that many people are funded and do it too early. So they need to somehow last.
Most startups spend the money within two years or less. It’s programmed into the psychy. A Sequoia would never admit this but they want you to spend your money fast and move on to the next thing if you aren’t growing fast enough. Buying one more year can be crucial.
That’s why it’s a horrendous idea to take VC funding if you’re not looking to spend it fast, and take huge risks. If you want to be capital efficient, do that, then raise when you know you can spend the money and the ROI is “guaranteed” (meaning you have a successful sales and execution engine), because then you can do it on your terms.
Otherwise, you raise, lose control, and are beholden to VCs for your next dollar. Good luck with that negotiation; they have the leverage.
Profit and revenue gives startups leverage, in nearly every way.
I'd tell the investor they can do 5-10% at that, or better, a convertivle note w 20% discount and $3-5M cap and (A) pointing to YC and (B) pointing out no follow on investor would join if they did higher -- after seed/A/B, only 50-60% of co should be sold. If a real investor followed, you'd be stuck paying legal fees to wash out the angel investor.
This all assumes a scalable startup, not a consultancy etc
We decided not to take angel investment, took longer to build a small business, and gave equity to more founders.
We're very proud of our profitable centicorn (one hundredth the size of a unicorn).
I guess its not easy to qualify since they get a bazillion application.
Do you just apply on the web ?
Do u have good references ?
Is it "real revenue" or r u counting the nominal sale value ?
Also - if u r still on WP then 30% may not be too bad :/
But they want tax returns and credit score. Thank you and i will look into Lighter Capita. SVB is silicon valley bank?
Tax returns and a credit score for your business? Or are they asking for a personal guarantee?
If this is right then the recent EU directive with the link tax, upload filter and censorship machine provisions will kill consumer internet startups in the EU, permanently.
> Maybe there are investors who want to line up outside your door to do your thing capital efficiently.
Another way of putting this is that operational excellence is a good moat. Pg talks about this repeatedly with his insistence that most startups fail through poor execution than anything else, through avoidable mistakes. This boring focus on operational excellence, on putting best practices into practice reliably and repeatedly. That’s what software private equity portfolios like Constellation Software do. Make big boring profits.
It bucks the trend that showing revenue (and then, showing profit) are liquidation events, not just investment opportunities. So it's not saying much that if you show revenue, you get a chance to liquidate or raise an up round. People have known that forever.
The more valuable perspective here is that many startups deliver products that are copies of stuff that already exists. That's just what VCs fund. So capital efficiency is your special sauce.
It would be nice to have a conversation about where capital efficiencies lie generally in technology. My feeling is that it is still in some sort of user-generated content. This is totally opposite of the trend to fund AI companies, which seek to replace the human being. Seems so much more capital-efficient to get the human being into doing expensive labor for free.
This leads to the most interesting counterpoint to the POV advanced here: capital efficiency is super important, but it's also super boring. Maybe there are investors who want to line up outside your door to do your thing capital efficiently. But the people working for you, especially at the beginning, do not care.
People want to be thought leaders, not penny pinchers.